Government expenditure decreases by $100 billion. a. If there is no Ricardo-Barro effect, explain how loanable funds,
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a. If there is no Ricardo-Barro effect, explain how loanable funds, saving, investment, and the real interest rate respond to this fiscal policy.
b. How does your answer in part a depend on the strength of the Ricardo-Barro effect?
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a The decrease in government expenditure by 100 billion increa...View the full answer
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