1) ________ imply/implies that, holding the present value of government spending constant, budget deficits will not crowd out investment. a. Ricardian equivalence b. Lower taxes c. Crowding in d. Lower interest rates
1) ________ imply/implies that, holding the present value of government spending constant, budget deficits will not crowd out investment. a. Ricardian equivalence b. Lower taxes c. Crowding in d. Lower interest rates
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1) ________ imply/implies that, holding the present value of government spending constant, budget deficits will not crowd out investment.
a. Ricardian equivalence
b. Lower taxes
c. Crowding in
d. Lower interest rates
2) Three macroeconomic theories used to explain the overall pattern on rising government debt are
a. tax smoothing, safe asset provision, and dynamic efficiency
b. tax smoothing, optimal fiscal rule, and inflation target
c. tax smoothing, inflation target, and dynamic efficiency
d. tax smoothing, optimal fiscal rule, and political turnover
3)The possible uses of the carbon tax revenue DOES NOT include
a. reduction of government spending
b. assistance to communities and workers most affected by the tax
c. environmental remediation
d. reduction of government deficits
4) A market failure in the form of an externality arises when
a. not all costs and benefits are included in the price of a good
b. a market fails to achieve equilibrium
c. the benefits of consuming a good exceed the costs
d. production costs are included in the price of a good
5) A common assumption of all political economy theories of government debt is
a. Ricardian equivalence
b. political turnover
c. time-inconsistency in government preferences
d. political polarization
6) The environmental effectiveness and cost-effectiveness of cap-and-trade programs are dependent on
a. how state and federal legislations interact with each other
b. how the regulatory authority determines the marginal cost for abating pollution
c. how the regulatory authority specifies the cap
d. how the regulatory authority monitors the level of emissions
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