The Ricardian Equivalence Proposition Will Not Hold If

question 87

Multiple Choice

The Ricardian equivalence proposition will not hold if

• A)the government finances its expenditures by borrowing rather than by taxing.
• B)the government finances its expenditures by taxing rather than by borrowing.
• C)consumers face restrictions on the amount they can borrow.
• D)consumers finance their tax payments by borrowing.

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Definitions:

Credit Sales

Credit sales are transactions where the customer purchases goods or services with an agreement to pay at a later date.

Cash Budget

A cash budget is a financial plan that estimates cash inflows and outflows over a specific period of time.

Housekeeping Budget

A financial plan allocating funds to maintain cleanliness, equipment, and supplies for housekeeping operations within an organization.

Occupied Rooms

In the context of hotel management, the number of rooms that are currently being used by guests.