Which of the following correctly explain Ricardian equivalence?
a. Government spending that is financed by borrowing has a smaller effect on the economy than government spending financed by raising taxes.
b. Consumers do not base current spending on future expected tax liabilities.
c. Government borrowing can function like increased current taxes, reducing current household and business expenditures.
d. The government should balance its budget by equating revenue and expenditure in every fiscal year.
e. Government spending does not crowd out private investment.
c
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The 2010 U.S. Federal Personal Income six tax brackets range from 10 percent for individuals earning less than $8,025 to 35 percent for those earning over $357,700 whereas the Lithuanian tax rate for all citizens' income is 24 percent
The Lithuanian income tax system is a ________ tax and the U.S. income tax system is a ________ tax. A) progressive; proportional B) regressive; progressive C) proportional; regressive D) proportional; progressive
Diseconomies of scale can be caused by
A) the law of diminishing returns. B) bureaucratic inefficiencies. C) increasing advertising and promotional costs. D) All of the above
An increase in government spending will cause a(n):
A. increase in aggregate supply. B. decrease in aggregate demand. C. decrease in aggregate supply. D. increase in aggregate demand.
Between 1999 and 2009, the U.S. federal budget deficit moved from a record surplus to a record deficit. Other things being equal, the most likely effect of this shift would be:
A. lower interest rates and increased investment. B. lower interest rates and decreased investment. C. higher interest rates and increased investment. D. higher interest rates and decreased investment.