Ricardian Equivalence Occurs When

question 193

Multiple Choice

Ricardian equivalence occurs when:

• A) the amount of tax increase is equivalent to the amount of private spending decrease.
• B) a tax cut now is equivalent to a tax cut in the future.
• C) people see that lower taxes today means higher taxes in the future.
• D) the amount of tax cut is equivalent to the amount of government spending reduction.

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Definitions:

Utility

In ethics and economics, the concept of creating the greatest happiness or benefit for the greatest number of people.

Pluralists

Advocates of a system in which power is distributed among various groups and organizations, ensuring no single entity dominates.

Relativists

Individuals who hold that moral principles are not absolute but instead vary with social or individual circumstances.

Hedonists

Individuals who believe that the pursuit of pleasure is the most important goal of human life.