Explain the proposition known as Ricardian equivalence
What will be an ideal response?
The theory of Ricardian equivalence is based on the premise that it does not matter whether government expenditures are financed by taxes or by issuing debt.
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Use the following table to answer the next question. The base year is 2007. Hot DogsBaseballsBottles of SodaYearPriceQuantityPriceQuantityPriceQuantity2005$2.00100$5.0050$2.0010020064.001005.001002.0015020076.001005.001002.0020020088.001508.002004.00200200910.0020010.002004.00250Nominal GDP for 2009 equals ________.
A. $2,300 B. $5,000 C. $2,700 D. $3,600
From the perspective of economic theory, property rights are
A) human rights. B) just as important as human rights. C) less important than human rights. D) more important than human rights. E) usually in conflict with human rights.
Which of the following takes place in the direct finance market?
A) Savers make funds available to borrowers by making deposits to savings accounts. B) Borrowers take out loans from banks. C) Loans to corporations are made from the sale of corporate bonds. D) Firms borrow funds from their retained earnings.
At a constant rate of exchange between currencies, higher inflation makes domestic goods sold abroad ________ expensive and hence, ________ short-run equilibrium output.
A. less; decreases B. more; increases C. more; decreases D. less; increases