The Idea That If Governments Cut Taxes but Not Spending,people

question 89

Multiple Choice

The idea that if governments cut taxes but not spending,people will not change their behavior,and expansionary policy will have little expansionary effect is known as:

• A)Ricardian equivalence.
• B)Keynesian policy.
• C)the invisible hand.
• D)Ricardian countenance.

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Definitions:

Coupon Rate

The coupon rate is the interest rate that the issuer of a bond agrees to pay annually or semi-annually to the bondholder.

Market Rate

The prevailing interest rate available in the general market.

Maturity Value

The amount that will be paid to the holder of a financial instrument at its maturity date, including principal and any remaining interest.

Premium

The amount paid for an insurance policy or the amount by which a bond or stock's value exceeds its underlying or face value.