Classical economists think that lump-sum tax changes
A. have no effect because of Ricardian equivalence.
B. have a powerful effect on the economy.
C. should be used to smooth business cycles.
D. affect aggregate demand after a lag.
Answer: A
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"The level of employment in an economy determines its real GDP, other things held constant." Do you agree or disagree? Why? What assumptions are necessary for your conclusion based on the classical model?
What will be an ideal response?
The foreign exchange rate is defined as the
A) equal to the amount of the current account deficit. B) equal to the amount of the capital account deficit. C) volume of the world currencies traded. D) rate or the speed with which the currencies of the worlds are traded. E) price at which one currency exchanges for another.
If the government reduced the minimum wage and pursued expansionary monetary policy, then in the long run
a. both the unemployment rate and the inflation rate would be higher. b. both the unemployment rate and the inflation rate would be lower. c. the unemployment rate would be higher and the inflation rate would be lower. d. the unemployment rate would be lower and the inflation rate would be higher.
Which question is an illustration of a microeconomic question?
A. Is the volume of wine produced in one year dependent upon the price of wine? B. Does government spending influence interest rates in the economy? C. Is the purchasing power of the dollar higher or lower today than it was in 2008? D. Which economic system is better for consumers and firms?