According to the Ricardian equivalence theorem, government deficits do not affect output because people:
A. save more when government deficits decrease.
B. consume more when government deficits increase.
C. save more when government deficits increase.
D. do not change consumption nor savings.
Answer: C
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Refer to Table 11.1. What is the value of the marginal propensity to import?
A) 0.15 B) 0.25 C) 0.6 D) 0.9
What is the key characteristic of profit maximizing price discrimination that distinguishes intertemporal price discrimination from peak-load pricing?
A) Peak-load pricing does not require MC = MR. B) Marginal revenue may be different across different groups of buyers under intertemporal price discrimination. C) Marginal costs are independent across time periods under peak-load pricing. D) Marginal revenue must be constant under both pricing schemes.
When government spending increases, consumption also increases via the multiplier process.
Answer the following statement true (T) or false (F)
The meaning of interdependence in a monopolistically competitive market is
A. that firms will not take into account the reaction of rival firms. B. that it is difficult for firms to get together to collude. C. that price rigging commonly occurs. D. that products produced by firms will be good substitutes.