If Ricardian Equivalence Holds, One Way to Get the Expansionary

question 94

Multiple Choice

If Ricardian equivalence holds, one way to get the expansionary effects of a tax cut to occur is:

• A) pair it with reduced government spending.
• B) pair it with increased government spending.
• C) to run a campaign inspiring people to buy goods made in the United States.
• D) None of these will create the expansionary effects of a tax cut.

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Definitions:

Matching Objects

The cognitive process of identifying similarities or differences among objects and grouping them based on their attributes.

Theory of Direct Perception

A theory suggesting that the environment provides all necessary cues for perception, which are directly picked up by the senses without need for cognitive processing.

Perceptual Information

Information that is sensed and interpreted by the brain from the environment through the sensory organs, forming the basis of perception.

Gibson

Refers to James J. Gibson, an influential psychologist known for his work on visual perception and affordances.