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 24 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
Thanks for the timely response, appreciate it

ultraflyy23

  • Member
  • Posts: 312
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Adult head lice are gray, about ? inch long, and often have a tiny dot on their backs. A female can lay between 50 and 150 eggs within the several weeks that she is alive. They feed on human blood.

Did you know?

Fatal fungal infections may be able to resist newer antifungal drugs. Globally, fungal infections are often fatal due to the lack of access to multiple antifungals, which may be required to be utilized in combination. Single antifungals may not be enough to stop a fungal infection from causing the death of a patient.

Did you know?

Women are 50% to 75% more likely than men to experience an adverse drug reaction.

Did you know?

There are more sensory neurons in the tongue than in any other part of the body.

Did you know?

Excessive alcohol use costs the country approximately $235 billion every year.

Where mangrove diversity is high, mangrove species show clear patterns of vertical zonation relative Where mangrove diversity is high, mangrove species show clear patterns of vertical zonation relative
Estimating cicada population size and predation rates by birds. Estimating cicada population size and predation rates by birds.
Orangutan males are twice the size and weight of females. Orangutan males are twice the size and weight of females.
Migration of Surface Cyclones Relative to Rossby Waves Migration of Surface Cyclones Relative to Rossby Waves
Average household size Average household size
Relative size ranges and fluorescent dye labeling colors of 16 STR Relative size ranges and fluorescent dye labeling colors of 16 STR
Video: Osmosis - water transport

For a complete list of videos, visit our video library