Ricardian equivalence can be said to hold if:
a. taxation has greater effect on private spending than government borrowing.
b. taxation has a lesser effect on private spending than government borrowing.
c. government borrowing does not affect private consumption while taxation has a negative impact on private consumption.
d. government spending activities financed by taxation and those financed by borrowing have the same effect on private spending.
e. government spending activities financed by taxation and those financed by borrowing have no effect on private spending.
Question 2
Which of the following demonstrates the law of supply?
a. When leather became more expensive, belt producers decreased their supply of belts.
b. When car production technology improved, car producers increased their supply of cars.
c. When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters.
d. When lemon prices rose, lemon growers increased their quantity supplied of lemons.
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