A good with an income elasticity of 0.4 is:

Ricardian equivalence is the proposition that

A) government expenditure should only be financed by taxes. B) it does not matter whether government expenditure is financed by creating new money or issuing debt. C) government expenditure should only be financed by issuing new debt. D) it does not matter whether government expenditure is financed by taxes or debt.

Marylou, whose utility of wealth curve is shown in the figure above, faces two options. Option A yields $200 for sure. Option B has a 0.3 probability of yielding $100, and a 0.7 probability of yielding $300. Marylou, who is

A) picks option A. B) picks option B. C) is indifferent between option A and option B. D) needs more information to make a choice.