Ricardian Equivalence Refers to the Same Impact of Financing Government

question 41

Multiple Choice

Ricardian equivalence refers to the same impact of financing government:

• A) whether by printing money or raising taxes.
• B) in the long run as in the short run.
• C) whether by debt or taxes.
• D) in an open economy as in a closed economy.

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Definitions:

Ruble

The official currency of Russia, symbolizing the country's economic activity.

Open-Market Operations

The buying and selling of government securities by a central bank to control the money supply and interest rates.

Federal Reserve

The primary banking authority in the United States, tasked with overseeing monetary policy, managing bank regulation, and maintaining financial system stability.

Money Multiplier

The amount of money the banking system generates with each dollar of reserves.