The Ricardian Equivalence Argument Says That Households and Businesses View

question 198

True/False

The Ricardian equivalence argument says that households and businesses view any increase in government spending as a sign that tax burdens will increase in the future, which will cause a decrease in private spending in anticipation of higher future taxes.

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Definitions:

Missouri Compromise

The Missouri Compromise, enacted in 1820, was an agreement passed by the U.S. Congress to maintain the balance of power between slave and free states, admitting Missouri as a slave state and Maine as a free state.

Free Blacks

African Americans who were not enslaved before the abolition of slavery, living either by manumission, birth to free parents, or in regions where slavery was not enforced.

State Constitution

The fundamental legal document outlining the structure, functions, and principles of government within a specific state, subordinate to the federal constitution.

Missouri Compromise

An agreement passed in 1820 that allowed Missouri to enter the Union as a slave state and Maine as a free state, while banning slavery in the remainder of the Louisiana Territory north of the 36° 30′ latitude.