Ricardian equivalence argues that when the government
A) increases taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving.
B) cuts taxes and decreases its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving.
C) cuts taxes and raises its surplus, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving.
D) cuts taxes and raises its deficit, consumers anticipate that they will face lower taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving.
E) cuts taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving.
E
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How will an interest rate increase in the United States affect equilibrium in the market for dollars against foreign currencies? (Assume the exchange rate is stated in terms of foreign currency per U.S. dollar.)
A) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded will increase. B) The equilibrium exchange rate will decrease, and the equilibrium quantity of dollars traded cannot be determined. C) The equilibrium exchange rate cannot be determined, and the equilibrium quantity of dollars traded will increase. D) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded cannot be determined.
If the income effect outweighs the price effect of a wage increase, the quantity of labor supplied will:
A. increase. B. decrease. C. remain constant. D. drop to zero.
Carol is a coal miner who just got laid off when the last coal mine in the area was shut down. She has looked everywhere for another job as a miner, but cannot find one. Given that Carol is unlikely to find another job as a miner, she would be considered:
A. real-wage unemployed. B. Carol is a discouraged worker. C. structurally unemployed. D. frictionally unemployed.
Which of the following people owns common stock?
a. Lance, who may get a dividend depending upon how a company performs. b. Vivian, who has no ownership in the company she is investing in. c. Marti, who gets paid before anyone else if the company has problems. d. Natasha, who has no voting rights in the company she invested in.