Which of the following occurs when consumers decide to save every penny of a tax cut, knowing that this tax cut must be financed by future tax increases?
A. Keynesian offset
B. Ricardian equivalence
C. Fiscal balancing
D. Animal spirits
Ans: B. Ricardian equivalence
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If the price of a good in a closed economy is greater than the world price, then if the country opens its markets to world trade the country will be a ________ of that good.
A. net exporter B. producer C. net importer D. importer and exporter
Fixed exchange rates are often maintained by using all of the following except:
A. Open speculation by individual traders in foreign currency markets B. International monetary reserves held by central banks C. Controls on imports and exports such as tariffs and quotas D. Domestic macroeconomic adjustments using monetary and fiscal policies
When a firm is hiring an input such that the marginal revenue product of the input is equal to the marginal factor cost of the input, the firm
A) should be expanding output. B) is hiring too little of the input. C) is maximizing economic profit. D) is producing too much output.
If a country allows free trade and its domestic price for a given good is lower than the world price, then it will import that good
a. True b. False Indicate whether the statement is true or false