To the extent that the Ricardian equivalence theorem is true, which of the conditions below will hold?
A) Increases in the government budget deficit will not affect aggregate demand.
B) Investment spending will not be considered part of aggregate demand.
C) The long-run aggregate supply curve will not be vertical.
D) Exports will not be considered part of aggregate demand.
A
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What will be an ideal response?
What is the domino effect or contagion?
What will be an ideal response?
When equilibrium GDP falls below potential GDP, an inflationary gap exists
a. True b. False Indicate whether the statement is true or false