The Logic of Ricardian Equivalence Implies That

question 16

Multiple Choice

The logic of Ricardian equivalence implies that:

• A) tax cuts do not influence consumer spending but changes in government spending do.
• B) neither tax cuts nor changes in government spending affect consumer spending.
• C) tax cuts combined with future decreases in government spending will decrease consumer spending.
• D) if the government cuts taxes and increases current government spending, consumer spending will increase.

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Definitions:

Marshall Plan

A U.S. program providing aid to Western Europe following the devastation of World War II, aimed at rebuilding economies and preventing the spread of communism.

African American Veterans

Military service members of African descent who served in the United States Armed Forces, often facing segregation and discrimination both during service and in post-service life.

Civil Rights Movement

A decades-long struggle during the mid-20th century in the United States, aiming to end racial segregation and discrimination against African Americans and secure legal recognition and federal protection of citizenship rights.

Red Scare

Periods of intense fear of communism and radical political ideologies in various countries, notably the United States, leading to repression and suspicion.