Which of the following is a basic assumption of the Ricardian equivalence theorem?
A) Consumers pay no attention to government budget deficits.
B) Consumers think only in terms of the present.
C) If current tax cuts result in budget deficit increases, aggregate supply falls.
D) Consumers consider future tax payments when deciding how much to spend and save today.
D
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Refer to Table 4-3. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the price of polo shirts increases from $15 to $20
A) producer surplus will rise from $13 to $28. B) there will be a surplus of polo shirts. C) the marginal cost of producing the third polo shirt will increase to $20. D) consumers will buy no polo shirts.
Refer to Table 2-9. If the two countries specialize and trade, who should export wristwatches?
A) Thailand B) They should both be importing wristwatches. C) Japan D) There is no basis for trade between the two countries.
In the classical model, a shift to the right in aggregate demand would result in
A) a permanent increase in unemployment. B) a permanent increase in real incomes. C) an increase in the price level. D) a permanent shift past full employment.
If the total variable cost of producing 5 units of output is $10 and the total variable cost of producing 6 units is $15, the marginal cost of producing a sixth unit is $5
a. True b. False Indicate whether the statement is true or false