1. An implication under the Ricardian equivalence of debt-financed tax cut is that a. the tax cut will increase aggregate demand b. consumption will be unaffected c. result in increased investment d. none of the above
1. An implication under the Ricardian equivalence of debt-financed tax cut is that
a. the tax cut will increase aggregate
b. consumption will be unaffected
c. result in increased investment
d. none of the above
2. Economists who believe that the economy is inherently unstable, especially in the short run, would go more for
a. passive economic policies
b. active economic policies
c. pro-cyclical policies
d. rules more than discretion
e. none of the above
3. According to the permanent-income hypothesis, an artist whose income fluctuates from year to year will:
a. have a higher average propensity to consume in years of low income.
b. have a lower average propensity to consume in years of high income
c. have a constant average propensity to consume in all years.
d. have a lower average propensity to consume during retirement.
4. In the Keynesian cross, if planned expenditure is below actual expenditure, we should expect
a. households will reduce their consumption to bring income to equilibrium
b. households will increase their consumption to enable planned expenditure to actual expenditure
c. firms to accumulate inventories causing income to fall
d. none of the above
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