According to David Ricardo, an Increase in Government Spending Without

question 104

Multiple Choice

According to David Ricardo, an increase in government spending without any tax increase will not increase aggregate demand because

• A)consumers will consume less and save more to prepare for increased taxes in the future.
• B)the private sector is more likely than the public sector to spend any extra income on national defense.
• C)consumers will increase their consumption proportionately more than Keynesian economists believe they will.
• D)consumers will save less than they otherwise would have.

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Definitions:

Bonds Payable

A classification in accounting for debts of a corporation due to be paid to bondholders at a specified date.

Operating Activities Section

Part of a cash flow statement that shows the cash generated or used in the primary revenue-producing activities of the business.

Land for Cash

Land for cash refers to the transaction in which real property is sold for cash payment without any financing involved.

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows over a given period.