Supposing Ricardian Equivalence Holds, an Increase in Current Taxes

question 20

Multiple Choice

Supposing Ricardian equivalence holds, an increase in current taxes

• A) increases current aggregate consumption.
• B) reduces current aggregate consumption.
• C) reduces current saving.
• D) increases government spending.
• E) reduces future aggregate consumption.

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Definitions:

Derivative Suit

A lawsuit brought by shareholders on behalf of a corporation against third parties or insiders like directors, alleging harm to the company.

Corporate Treasury

The division within a corporation that manages the company's finances, including cash flow, investments, and risk.

Cumulative Voting

A voting system commonly used in corporate elections that allows shareholders to concentrate their votes on a single candidate, as opposed to distributing them among multiple candidates.

Straight Voting

A voting system where shareholders must vote for directors individually, with each shareholder's vote proportional to their shareholding.