If there is limited commitment and the government is no better at collecting on its debts than is the private sector, then
A) Ricardian equivalence holds.
B) the private sector can benefit from a government loan program.
C) Ricardian equivalence does not hold.
D) the Fisher relation does not hold.
A
You might also like to view...
Monopolistic competition is characterized by excess capacity because
A. firms charge a price that is greater than marginal cost. B. firms produce at an output level less than the least-cost output. C. firms are always profitable in the long run. D. the demand for a product is perfectly elastic in this type of industry.
Explain why the purchase and sale of used goods and of financial assets are not included in the calculation of GDP even though transactions in these items amount to billions of dollars daily
What will be an ideal response?
In the last two decades of the 20th century, developing countries as a whole have
a. grown more slowly than developed countries b. grown a bit more rapidly than developed countries c. grown much more rapidly than developed countries d. made very little progress e. none of the above
Suppose that a firm produces electricity by burning coal. The production process creates a negative externality of air pollution. If the firm does not internalize the cost of the externality, it will produce where
a. the value of electricity to consumers equals the private cost of producing electricity. b. the value of electricity to consumers equals the social cost of producing electricity. c. the cost of the externality is maximized. d. the transaction costs of private bargaining are minimized.