According to the Ricardian Equivalence Proposition

question 68

Multiple Choice

According to the Ricardian equivalence proposition,

• A)saving equals investment only at full employment.
• B)a decline in the demand for money results in an equivalent increase in the demand for nonmoney assets.
• C)the increase in current income from a tax cut is offset by higher taxes in the future to pay off the debt.
• D)government spending is the equivalent of investment spending.

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Definitions:

Pearson Correlation Coefficient

A measure of the linear correlation between two variables X and Y, giving a value between +1 and -1, where 1 is total positive linear correlation, 0 is no linear correlation, and -1 is total negative linear correlation.

Sales

The action or business of selling products or services to customers.

Experience

The knowledge or mastery of an event or subject gained through involvement in or exposure to it.

Coefficient of Determination

The coefficient of determination, often denoted as R^2, measures the proportion of the variance in the dependent variable that is predictable from the independent variable(s).