According to the Ricardian equivalence theorem, people increase savings today when the government increases deficits because they recognize that:
A. consumption increases future taxes.
B. government deficits imply higher future taxes.
C. government deficits imply lower future taxes.
D. consumption reduces future taxes.
Answer: B
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GDP would be a better measure of economic well-being if it included:
A. the value of leisure. B. the market value of final goods. C. the total value of intermediate goods. D. the costs of education.
In the short-run macro model, which of the following is the cause of cyclical unemployment?
a. It takes time for people to move to new jobs. b. Insufficient aggregate spending. c. It takes time for firms to find new employees. d. It takes time for people to retrain. e. Fewer people want to work than before.
Suppose 20 percent of the families receive 20 percent of the income, 40 percent of the families receive 40 percent of the income, and so forth. The Lorenz curve would be
A. the most bowed curve possible. B. the horizontal axis. C. a straight line at a 30-degree angle from the origin. D. a straight line at a 45-degree angle from the origin.
Not buying junk food while doing the weekly shopping and forcing an extra trip to the store to acquire it is an example of:
A. how people compensate for time-inconsistent decisions. B. increasing the cost of a vice. C. a commitment device. D. All of these are true.