If Ricardian Equivalence Holds,then an Expansionary Fiscal Policy Will

question 205

Multiple Choice

If Ricardian equivalence holds,then an expansionary fiscal policy will:

• A) decrease aggregate demand in the short run.
• B) increase aggregate demand in the short run,but not in the long run.
• C) increase aggregate demand in both the short run and in the long run.
• D) have no effect on aggregate demand either in the short run or in the long run.

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Definitions:

Condition

A stipulation in a contract that must be met for the contract to be legally binding, or an event whose occurrence or non-occurrence affects the validity of the contract.

Warranty

A guarantee, provided by a seller or manufacturer, assuring the quality, performance, or lifespan of a product, often implying repair or replacement if specifications are not met.

Tender Of Performance

An unsuccessful (because it is rejected or prevented by the other party) attempt by one of the parties to a contract to perform its obligations under the contract.

Breach Of Contract

The violation of any agreed-upon terms or conditions in a binding contract, which can lead to legal consequences for the party in breach.