If Ricardian equivalence holds, one way to get the expansionary effects of a tax cut to occur is:
A. pair it with increased government spending.
B. pair it with reduced government spending.
C. to run a campaign inspiring people to buy goods made in the United States.
D. None of these will create the expansionary effects of a tax cut.
Answer: D
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The slope of an indifference curve is equal to the ratio of the ____ of the good on the horizontal axis to the ____ of the good on the vertical axis
a. marginal product (MP); total value (TV) b. marginal utility (MU); marginal utility (MU) c. price (P); price (P) d. total utility (TU); price (P)
Modern Keynesians differ from traditional Keynesians because modern Keynesians
A. Believe that failures of the economy are inherent in a capitalist economy. B. Believe that tax cuts and government spending should be used to increase aggregate demand and output. C. Favor fixed rules and steady, predictable policies. D. Believe that monetary policy can be useful in managing the economy.