This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: What does Ricardian equivalence imply about the relative size of the expenditure and tax ... (Read 35 times)

mrsjacobs44

  • Hero Member
  • *****
  • Posts: 500
on: Jun 30, 2018
What does Ricardian equivalence imply about the relative size of the expenditure and tax multipliers?
 
  What will be an ideal response?

Question 2

Menu costs suggest that sticky prices are ____ for firms but _____ for the economy as a whole.
 
  a. optimal; suboptimal
  b. bad; good
  c. natural; unnatural
  d. suboptimal; optimal.
  e. suboptimal; suboptimal


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

lkoler

  • Sr. Member
  • ****
  • Posts: 358
Reply #1 on: Jun 30, 2018
Answer to Question 1

If Ricardian equivalence holds, the tax multiplier is zero. The expenditure multiplier is zero, as well, since the decrease in government saving is matched by an increase in private saving. If, however, the increase in government spending is believed to contribute to future output, the expenditure multiplier may be greater than zero, and some private investment would be crowded out.

Answer to Question 2

A


mrsjacobs44

  • Member
  • Posts: 500
Reply 2 on: Jun 30, 2018
:D TYSM

nanny

  • Member
  • Posts: 313
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

Adults are resistant to the bacterium that causes Botulism. These bacteria thrive in honey – therefore, honey should never be given to infants since their immune systems are not yet resistant.

Did you know?

Illicit drug use costs the United States approximately $181 billion every year.

Did you know?

According to the CDC, approximately 31.7% of the U.S. population has high low-density lipoprotein (LDL) or "bad cholesterol" levels.

Did you know?

Patients should never assume they are being given the appropriate drugs. They should make sure they know which drugs are being prescribed, and always double-check that the drugs received match the prescription.

Did you know?

The training of an anesthesiologist typically requires four years of college, 4 years of medical school, 1 year of internship, and 3 years of residency.

Relative permeability of an artificial phospholipid bilayer to a variety of solutes. Relative permeability of an artificial phospholipid bilayer to a variety of solutes.
Detritivores are often classified according to their body size as microflora, microfauna, mesofauna, Detritivores are often classified according to their body size as microflora, microfauna, mesofauna,
Double-label fluorescence microscopy can visualize the relative distributions of Double-label fluorescence microscopy can visualize the relative distributions of
IPCC Temperature Increase Predictions Relative to 1986-2005 IPCC Temperature Increase Predictions Relative to 1986-2005
Human mtDNA molecule, showing the locations of HVS I and II regions relative to other mtDNA genes Human mtDNA molecule, showing the locations of HVS I and II regions relative to other mtDNA genes
Bill Size in African Finches Bill Size in African Finches
Video: Lower Limb Arteries Animation

For a complete list of videos, visit our video library