A government deficit has increased from 30 to 50. The country’s trade deficit is 100 and private savings equal 65 and investment equal 90. If Ricardian neutrality holds true, after this change in the government’s budget, private savings will equal:
A. 40.
B. 105.
C. 95.
D. 85.
Answer:D
A government deficit has increased from 30 to 50. The country’s trade deficit is 100 and private savings equal 65 and investment equal 90. If Ricardian neutrality holds true, after this change in the government’s budget, private savings will equal:
A. 40. B. 105. C. 95. D. 85.
Explanation: Type: Multiple Choice