Assuming that the Ricardian equivalence theorem is TRUE, which of the conditions below will hold?
A. Investment spending will not be considered part of aggregate demand.
B. The long-run aggregate supply curve will not be vertical.
C. Exports will not be considered part of aggregate demand.
D. An increase in the government budget deficit will not affect aggregate demand.
Answer: D
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If a tariff is imposed on imports of shrimp into the United States, U.S. consumer surplus from shrimp will ________ and U.S. producer surplus from shrimp will ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease E) increase; not change
A firm in a price-taker market:
a. must take the price that is determined in the market. b. must reduce its price if it wants to sell a larger quantity. c. must be large relative to the total market. d. can exert a major influence on the market price.
Nick owns a dog whose barking annoys his neighbor Jane. Suppose that the benefit of owning the dog is worth $700 to Nick, and that Jane bears a cost of $500 from the barking. Assume that the city has no ordinance against barking dogs. A possible private solution that would benefit both parties is for: a. There is no private solution that would improve this situation for both parties. b. Jane to
pay Nick $650 to get rid of the dog. c. Jane to pay Nick $800 to get rid of the dog. d. Nick to pay Jane $600 for her inconvenience.
Which of the following raise the incentive for households to save?
a. means-testing of government benefits and inheritance taxes b. means-testing of government benefits but not inheritance taxes c. inheritance taxes, but not means-testing of government benefits d. neither means-testing of government benefits nor inheritance taxes