According to the Ricardian equivalence theorem, budget deficits resulting from tax cuts
A) increase aggregate demand.
B) decrease aggregate demand.
C) have no effect on aggregate demand.
D) affect only aggregate supply.
Ans: C) have no effect on aggregate demand.
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The elasticity of demand for a product is likely to be greater
A) the smaller the number of substitute products available. B) the smaller the proportion of one's income spent on the product. C) the larger the number of substitute products available. D) if the product is an imported good rather than a domestically produced good.
Despite the monies spent by the federal and state governments, many observers believe which of the following?
a. public infrastructure such as bridges and roads is only adequate b. our educational system is lacking c. not enough monies are spent on homeland defense d. all of these are correct
Over time, an increase in a nation's stock of physical capital will
a. shift the production possibilities curve inward. b. cause an economy to operate inside its production possibilities curve. c. shift the production possibilities curve outward. d. eliminate the basic economic problem of scarcity.
Fractional reserve banking originated
A) when the United States Congress passed a law regarding the required reserve ratio. B) when goldsmiths realized they could issue warehouse receipts beyond gold on deposits. C) with the establishment of the Federal Reserve System. D) in the United States with the Clayton Act.