Which government policy is the principal focus of Ricardian Equivalence?
A) tax cuts
B) government spending increases
C) government borrowing
D) seignorage
A
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“Those most able should pay the highest taxes” reflects the
A. ability-to-pay principle. B. concept of horizontal equity. C. idea of fiscal federalism. D. benefits principle.
Answer the following statement true (T) or false (F)
1) Both neoclassical and behavioral economics believe that people are mostly rational in both their decision making and their actions. 2) Behavioral economists believe that while people try to make rational decisions, they are frequently subject to systematic errors. 3) Behavioral economics recognizes that people frequently make errors, but these errors generally cancel out in such a way that neoclassical models are sufficient for predicting economic outcomes. 4) Neoclassical and behavioral economics are generally complementary.
All but one of the following have been suggested by some economists as possible consequences of path dependency and switching costs. Which of the following is not a possible consequence of path dependency and switching costs?
A) Consumers may get locked into using products with inferior technology. B) market failure C) diseconomies of scale D) Government intervention may be necessary in affected markets in order to improve economic efficiency.
Suppose the money demand function is given by Md/P = 640 + 0.1Y - 5000 (r + ?e).Suppose the central bank changes the nominal money supply depending on income and inflation: Ms = 1000 + 0.1Y - 4000?.(a)If expected inflation equals actual inflation = 0.03, Y = 1000, and r = 0.02, calculate the price level.(b)If inflation rises to 0.04 while the other variables remain as in part a, calculate the price level.(c)If expected inflation rises to 0.04 while the other variables remain as in part a, calculate the price level.(d)If the real interest rate rises to 0.03 while the other variables remain as in part a, calculate the price level.
What will be an ideal response?