The Ricardian Equivalence Proposition States That an Increase in the Budget

question 60

Multiple Choice

The Ricardian equivalence proposition states that an increase in the budget deficit causes:

• A) consumption to increase.
• B) consumption to decrease.
• C) private saving to decrease.
• D) output to increase.
• E) private saving to increase.

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Definitions:

Weighted Average

An average that takes into account the relative importance or weight of each value in the data set.

Purchase Price

The amount of money paid or agreed to be paid to buy something.

Stock Price

The cost or value of a single share of a company's stock, fluctuating based on supply and demand in the market.

Median

The middle value in a sorted list of numbers.