Ricardian equivalence suggests that forward looking households ________ the future taxes required to pay off government debt, so that reductions in lump-sum taxes have ________ effect on the economy
A) fully anticipate; a multiplied
B) fully anticipate; no
C) are unaware of; a negative
D) are unaware of; a positive
B
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If the CPI this year is 240 and the CPI in the previous year was 200, what is the annual inflation rate?
A) 20.0 percent B) 50 percent C) 16.7 percent. D) -16.7 percent E) 40.0 percent
Suppose that U.S. savers decide that holding Brazilian assets has become riskier. What happens to U.S. net capital outflow? What happens to the U.S. real interest rate?
A measure of overall prices at a particular point in time is called:
A. a real price. B. inflation. C. the price level. D. a relative price.
Consider an individual consumption function, which is the standard textbook consumption function, that is, has a y-intercept of autonomous consumption and is linear in the disposable income. Assume that the slope of this consumption function equals 0.7, and that the autonomous consumption equals $20 billion in the aggregate economy. Write down the consumption function for this economy.
What will be an ideal response?