The Ricardo-Barro effect asserts that
A) government saving affects private saving.
B) government budget deficits crowd out private borrowing.
C) government expenditure affects private expenditure.
D) taxation raises interest rates.

Question

Quizplus · Accepted Answer

The Ricardo-Barro effect suggests that when the government saves more, individuals may save less because they anticipate lower future taxes, thus affecting private saving.

The Ricardo-Barro Effect Asserts That