According to Ricardian Equivalence,consumers May Not Respond to a Tax

question 13

Multiple Choice

According to Ricardian Equivalence,consumers may not respond to a tax cut ________.

• A)if that tax cut is directed solely at upper income groups
• B)if that tax cut is directed solely at lower income groups
• C)since they understand a tax cut today will lead to a tax increase in the future
• D)if they lack patriotic fervor

---

Definitions:

Producer Surplus

The difference between what producers are willing to sell a good for and the actual market price they receive, representing the profit producers make.

Tax

A compulsory charge by the government on individuals or entities' income, property, or goods, used to fund public services and government obligations.

Deadweight Loss

Deadweight loss refers to the loss of economic efficiency when the equilibrium outcome is not achievable or is not achieved in the market.

Tax

A compulsory monetary fee or a different kind of charge levied on a taxpayer by a government entity to finance government expenses and various public costs.