If the Ricardian Equivalence Were True, the Effect of an Increase

question 100

Multiple Choice

If the Ricardian Equivalence were true, the effect of an increase in government expenditure

• A) is effective only if done both by borrowing and by taxation.
• B) is the better it is financed by borrowing instead of taxation.
• C) is the same regardless on whether it is financed by borrowing or by taxation.
• D) is the better it is financed by taxation instead of borrowing.

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Definitions:

Retail Method

A pricing strategy used in retail to maintain a consistent profit margin by marking up goods based on their wholesale cost.

Retail Method

An accounting method used to estimate ending inventory and cost of goods sold by calculating a cost-to-retail percentage and applying it to the retail price.

Estimated Cost

The anticipated cost to undertake a project or produce a good, used for budgeting and planning purposes.

Ending Inventory

The total value of all unsold goods remaining at the end of an accounting period, calculated for cost of goods sold reporting.