According to Ricardian Equivalence,a Tax Cut Will Not Have a Material

question 50

Multiple Choice

According to Ricardian Equivalence,a tax cut will not have a material impact on consumption spending since ________.

• A)households will simply save the monies received from the tax cut
• B)the value of the tax multiplier is one
• C)a tax cut must lead to an increase in prices,which leaves the real value of consumption unchanged
• D)a decrease in taxes will be balanced,under current federal law,by a government spending increase

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Definitions:

Controlling Biases

The practice of recognizing and attempting to minimize or eliminate biases in one's judgments and decisions.

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors, driving individuals to pursue specific objectives.

Awareness

The state or ability to perceive, feel, or be conscious of events, objects, or sensory patterns.

Stereotypic Thinking

A type of thinking where individuals assign a fixed, oversimplified set of characteristics to a group without allowing for individual variance or complexity.