A government deficit has decreased from 100 to 60. The country’s trade deficit is 120 and private savings equal 80 and investment equals 100. If Ricardian neutrality holds true, after this change in the government’s budget, private savings will equal:
A. 120.
B. 70.
C. 40.
D. 140.
Answer:C
A government deficit has decreased from 100 to 60. The country’s trade deficit is 120 and private savings equal 80 and investment equals 100. If Ricardian neutrality holds true, after this change in the government’s budget, private savings will equal:
A. 120. B. 70. C. 40. D. 140.
Explanation: Type: Multiple Choice