The Experience of the 1980s

question 7

Multiple Choice

The experience of the 1980s:

• A)clearly contradicted the Ricardian equivalence view because national saving was very low.
• B)clearly supported the Ricardian equivalence view, for people saved little only because they were optimistic, as confirmed by the stock market.
• C)will provide a clear Answer on the validity of Ricardian equivalence as soon as economists are able to analyze it with their computers.
• D)may be used to argue both in favor of and against the Ricardian equivalence view of the tax cuts.

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Definitions:

Standard Deviation

A parameter that assesses the extent of difference or range within a batch of numerical values.

Risk-Averse Investor

An investor who prefers lower returns with known risks rather than higher returns with unknown risks.

Slope of the Budget Line

The rate at which one good can be traded for another, reflecting the relative prices of two goods.

Standard Deviation

An indicator that calculates how much a group of figures deviates or scatters from each other.