Supposing Ricardian Equivalence Holds, an Increase in Current Taxes

question 3

Multiple Choice

Supposing Ricardian equivalence holds, an increase in current taxes

• A)increases government spending.
• B)reduces future aggregate consumption.
• C)increases current aggregate consumption.
• D)reduces current saving.
• E)reduces current aggregate consumption.

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Definitions:

Egocentric Empathy

The limited ability to understand another's perspective, assuming others feel the same as oneself.

Role-Taking

The process of mentally assuming the perspective of another person to understand their thoughts, feelings, or behaviors.

Decentration

The cognitive ability to pull away from focusing on just one feature of an object in order to consider multiple features.

Prosocial Behavior

Behavior such as sharing, helping, caregiving, and showing compassion.