Ricardian Equivalence Refers to

question 3

Multiple Choice

Ricardian equivalence refers to

• A) the equivalence of taxes and revenues in fiscal policy.
• B) the fact the households incorporate inflationary expectations in calculating interest payments.
• C) the equivalence of imports and exports in an open economy.
• D) the possibility that households may say save now so that they can pay the higher taxes later if there is a tax cut at the present time which drives up future interest payments.
• E) none of the above.

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Definitions:

Produce More

The act of increasing the output of goods or services, typically in response to higher demand or improved efficiency.

U.S. Economy

The economic system of the United States, characterized by a mixed economy with a high level of output, innovation, and diversity of goods and services.

Mixed Economy

An economic system blending elements of market capitalism with some form of government intervention and public enterprise.

Barter Economy

An economic system where goods and services are exchanged directly for other goods and services without using money.