The Experience of the 1980s

question 84

Multiple Choice

The experience of the 1980s:

• A) clearly contradicted the Ricardian equivalence view because national saving was very low.
• B) clearly supported the Ricardian equivalence view, for people saved little only because they were optimistic, as confirmed by the stock market.
• C) will provide a clear answer on the validity of Ricardian equivalence as soon as economists are able to analyze it with their computers.
• D) may be used to argue both in favor of and against the Ricardian equivalence view of the tax cuts.

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Definitions:

Groupthink

A psychological phenomenon where the desire for harmony and conformity within a group leads to irrational or dysfunctional decision-making outcomes.

Social Identity

The aspect of a person's self-identity that comes from their understanding of belonging to certain social groups.

Ingroup Bias

The tendency to favor members of one's own group over those in other groups.

Social Comparison

The process of comparing oneself to others in order to evaluate one's own abilities, status, or situation.