The Ricardian Equivalence Proposition Suggests That a Government Deficit Caused

question 7

Multiple Choice

The Ricardian equivalence proposition suggests that a government deficit caused by a tax cut

• A)causes inflation.
• B)causes a current account deficit.
• C)raises interest rates.
• D)doesn't affect consumption.

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Definitions:

Specific Performance

A legal remedy requiring a party to perform a specific act, often used in contracts when monetary compensation is inadequate.

Breach of Contract

The violation of any of the agreed-upon terms and conditions in a contract without lawful excuse.

Unenforceable

A term describing a contract or agreement that, due to certain defects or circumstances, cannot be legally compelled or executed.

Promise

An assurance given by one party to another agreeing to do or not do something in the future.