Ricardian Equivalence Occurs When

question 193

Multiple Choice

Ricardian equivalence occurs when:

• A) the amount of tax increase is equivalent to the amount of private spending decrease.
• B) a tax cut now is equivalent to a tax cut in the future.
• C) people see that lower taxes today means higher taxes in the future.
• D) the amount of tax cut is equivalent to the amount of government spending reduction.

---

Definitions:

Weighted Average Cost

A method of calculating the cost of goods sold and ending inventory cost by taking into account the cost of goods purchased at varying prices.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, used in calculating cost of goods sold.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material, labor, and overhead costs.

Purchase Discounts

A deduction from the stated price of goods or services allowed by the seller to the buyer for prompt payment.