Assuming That the Ricardian Equivalence Theorem Is TRUE, Which of the Conditions

question 68

Multiple Choice

Assuming that the Ricardian equivalence theorem is TRUE, which of the conditions below will hold?

• A) An increase in the government budget deficit will not affect aggregate demand.
• B) Exports will not be considered part of aggregate demand.
• C) Investment spending will not be considered part of aggregate demand.
• D) The long-run aggregate supply curve will not be vertical.

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Definitions:

Unfavorable Materials Price

A variance that occurs when the actual price paid for materials exceeds the standard or expected cost, impacting profits negatively.

Quantity Variances

Quantity variances refer to the difference between the actual and planned (or standard) quantity of input used in production, affecting cost control and operational efficiency.

Efficiency Standard

A benchmark for measuring the productivity and performance of operations, often aiming to minimize waste and maximize output.

Volume Standard

A benchmark measure of quantity, used to gauge efficiency or capacity in production and operations.