Choose the Statement That Is Incorrect

question 29

Multiple Choice

Choose the statement that is incorrect.

• A)According to the Ricardo-Barro effect, taxpayers are rational people who know that a budget deficit today means that future taxes will be higher and future disposable incomes will be smaller.
• B)According to the Ricardo-Barro effect, a budget deficit has no effect on either the real interest rate or investment.
• C)Most economists believe that the Ricardo-Barro effect holds in the market for loanable funds.
• D)According to the Ricardo-Barro effect, the quantity of loanable funds demanded increases when a government budget deficit occurs, and private saving and the private supply of loanable funds increase to match the quantity of loanable funds demanded.
• E)All of the above statements are correct.

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Definitions:

Genetic Information

The data encoded in an organism's DNA, including gene sequences and their variations, which dictates the inherited traits of the organism.

Cognitive Miser

A cognitive miser is a theory in social psychology suggesting that humans conserve cognitive energy by relying on heuristics or mental shortcuts to make decisions and judgments.

Motivated Tactician

A model of social cognition that characterises people as having multiple cognitive strategies available, which they choose among on the basis of personal goals, motives, and needs.

Role of Thought

The importance or function of cognitive processes in understanding and reacting to the environment.