Proponents of Ricardian Equivalence Argue That If Taxes Are Cut

question 10

Multiple Choice

Proponents of Ricardian equivalence argue that if taxes are cut without cutting government spending and taxes are not expected to increase in the future until after an individual expects to be dead, then the individual will:

• A) spend all of the increase in income.
• B) spend some of the increase in income and save the rest.
• C) use the increase in income to buy government bonds to help finance the deficit.
• D) save all of the increase in income and leave it as a bequest to his or her children.

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Definitions:

Transformational Leader

A type of leader who inspires and motivates followers to achieve extraordinary outcomes by transforming their beliefs and values.

Potential Payoff

The expected or anticipated return or benefit derived from an investment or action.

Subordinates

Individuals who are lower in rank or position within an organization, often reporting to a supervisor or manager.