Author Question: If the central bank increases the money supply at the same time as government spending increases, ... (Read 41 times)

Metfan725 · **on:** Jun 30, 2018

If the central bank increases the money supply at the same time as government spending increases, then:

a. interest rates must increase.
b. interest rates must decrease.
c. income must increase.
d. income must decrease.

Question 2

One objection to the notion of Ricardian Equivalence is that ________.

A) households will recognize that a tax cut today will only lead to a tax increase in the future
B) individuals are short-sighted in their spending decisions
C) borrowing constraints have largely been eliminated due to financial innovation in the provisioning of consumer credit
D) households typically save most of the monies received from a tax cut