Which of the following is a basic assumption of the Ricardian equivalence theorem?
A. If current tax cuts result in budget deficit increases, consumers increase their labor supply today.
B. Consumers consider future tax payments when deciding how much to spend and save today.
C. Consumers think only in terms of the present.
D. Consumers pay no attention to government budget deficits.
Answer: B
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The Audubon Society currently allows three oil companies to extract natural gas on its Rainey Wildlife Sanctuary because
A) natural gas is more valuable than wildlife conservation. B) oil interests actually own the Audubon Society. C) the government required the leasing of natural gas rights under its power of eminent domain. D) the sanctuary must, by law, be used to promote the public interest. E) the sanctuary is the private property of the Audubon Society.
One reason stagflation is difficult to recover from is because:
A. less output requires less inputs to be hired. B. prices tend to adjust more quickly downward than upward. C. wages are sticky downward. D. input prices increase with output prices.
How does aggregate demand (AD) curve differ from an individual demand curve (D)?
A. D represents the price-quantity relationship for a single good or service while AD looks at the entire economic system. B. AD is generally vertical while D is usually downward sloping. C. AD is generally a downward sloping curve while D usually slopes upward. D. Look for D in macroeconomic analyses and for AD in microeconomics.
Government can play a major positive role in the early stage of economic development by:
A. Providing an adequate infrastructure B. Establishing price controls for products C. Promoting exports by subsidizing them D. Creating marketing boards for export products