Which of the Following Correctly Explain Ricardian Equivalence

question 29

Multiple Choice

Which of the following correctly explain Ricardian equivalence?

• A)Government spending that is financed by borrowing has a smaller effect on the economy than government spending financed by raising taxes.
• B)Consumers do not base current spending on future expected tax liabilities.
• C)Government borrowing can function like increased current taxes, reducing current household and business expenditures.
• D)The government should balance its budget by equating revenue and expenditure in every fiscal year.
• E)Government spending does not crowd out private investment.

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Definitions:

Conversion Risk

The uncertainty associated with changing one form of currency to another, which may result in financial loss due to fluctuating exchange rates.

Behavioral Feasibility

Assesses whether the people and organizational culture will adapt to changes required by a proposed system or project.

Human Issues

Concerns or problems related to human factors, such as ergonomics, human error, and workforce management.

Systems Development

The process of creating and implementing a new system, including both software and hardware components, to meet specific business or user requirements.