If Ricardian Equivalence Holds

question 223

Multiple Choice

If Ricardian equivalence holds:

• A) taxpayers respond to lower tax rates today with increased savings today.
• B) taxpayers respond to lower tax rates today with increased spending today.
• C) consumption smoothing is less important than when Ricardian equivalence doesn't hold.
• D) changes in fiscal policy are more likely to have a larger impact on aggregate demand.

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Definitions:

Contraceptives

Methods or devices used to prevent pregnancy, contributing to family planning and control of population growth.

Apathetic Leadership

A leadership style characterized by a lack of interest in or concern for the well-being of followers, the organization, or societal issues.

Family Planning

The practice of controlling the number of children in a family and the intervals between their births, particularly by means of contraception or voluntary sterilization.