To the Extent That the Ricardian Equivalence Theorem Is True

question 15

Multiple Choice

To the extent that the Ricardian equivalence theorem is true, which of the conditions below will hold?

• A)Increases 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:

Neurons

Specialized cells within the nervous system that transmit information to other neurons, muscles, or gland cells.

Muscle Tissue

A tissue composed of cells or fibers, the function of which is to contract to facilitate movement of the body or its parts.

Contractility

The ability of muscle fibers to shorten and generate force.

Glia

Non-neuronal cells in the central and peripheral nervous system that support, nourish, and protect neurons.