Principles of Macroeconomics 2e
2nd Edition
ISBN: 9781947172388
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 18, Problem 10RQ
What is the theory of Ricardian equivalence?
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Chapter 18 Solutions
Principles of Macroeconomics 2e
Ch. 18 - In a country, private savings equals 600, the...Ch. 18 - Assume an economy has a budget surplus of 1,000,...Ch. 18 - In the late 1990s, the U.S. government moved from...Ch. 18 - Imagine an economy in which Ricardian equivalence...Ch. 18 - Why have many education experts recently placed an...Ch. 18 - What are some steps the government can take to...Ch. 18 - Based on the national saving and investment...Ch. 18 - How would you expect larger budget deficits to...Ch. 18 - Under what conditions will a larger budget deficit...Ch. 18 - What is the theory of Ricardian equivalence?
Ch. 18 - What does the concept of rationality have to do...Ch. 18 - What are some of the ways fiscal policy might...Ch. 18 - What are some fiscal policies for improving a...Ch. 18 - What are some fiscal policies for improving the...Ch. 18 - Explain how cuts in funding for programs such as...Ch. 18 - Assume there is no discretionary increase in...Ch. 18 - Explain how decreased domestic investments that...Ch. 18 - The U.S. government has shut down a number of...Ch. 18 - Explain how a shift from a government budget...Ch. 18 - Describe how a plan for reducing the government...Ch. 18 - Explain whether or not you agree with the premise...Ch. 18 - Explain why the government might prefer to provide...Ch. 18 - Under what condition would crowding out not...Ch. 18 - What must take place for the government to run...Ch. 18 - Sketch a diagram of how a budget deficit causes a...Ch. 18 - Sketch a diagram of how sustained budget deficits...Ch. 18 - Assume that the newly independent government of...Ch. 18 - Illustrate the concept of Ricardian equivalence...Ch. 18 - During the most recent recession, some economists...
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Similar questions
- Answer the question completely: 1. How can fiscal policy promote economic growth and development?arrow_forwardHow does the two-good, two-country version of the Ricardian model differ from the two- country, many-good model in terms of the determination which goods are produced and exported by each country? Please use graphs to explain your answers.arrow_forwardDescribe in one sentence what Ricardian equivalence implies for the government budget and the current account. In another sentence, describe to what extent the equivalence holds in practice.arrow_forward
- Question: Use the IS curve to explain how Ricardian Equivalence works.arrow_forwardWhat are some of the ways fiscal policy might encourage economic growth?arrow_forwardConsider Macroeconomic inter-dependencies between countries. If a large economy such as the US undertakes an expansionary fiscal policy, this willarrow_forward
- Suppose that Antonio, an economist from a business school in Georgia, and Caroline, an economist from a university in Massachusetts, are arguing over budget deficits. The following dialogue shows an excerpt from their debate: Caroline: Most people recognize that the budget deficit has been rising considerably over the last century. We need to find the best course of action to remedy this situation. Antonio: I believe that a cut in income tax rates would boost economic growth and raise tax revenue enough to reduce budget deficits. Caroline: I actually feel that raising the top income tax rate would reduce the budget deficit more effectively. The disagreement between these economists is most likely due to . Despite their differences, with which proposition are two economists chosen at random most likely to agree? Having a single income tax rate would improve economic performance. Immigrants receive more in government benefits than they contribute in taxes.…arrow_forwardWhen are larger deficits desirable?arrow_forwardRicardian equivalence: Suppose that the government fears the economy mightbe heading into a recession and decides to cut income taxes today in an efortto prevent the recession.arrow_forward
- What is the role of fiscal policy in developed countries? Give examplearrow_forwardWhat is The Effect of a Government Budget Deficit on Investment?arrow_forwardSuppose that Jacques, an economist from a research institute in Texas, and Kyoko, an economist from a university in Massachusetts, are arguing over budget deficits. The following dialogue shows an excerpt from their debate: Kyoko: Most people recognize that the budget deficit has been rising considerably over the last century. We need to find the best course of action to remedy this situation. Jacques: I believe that a cut in income tax rates would boost economic growth and raise tax revenue enough to reduce budget deficits. Kyoko: I actually feel that raising the top income tax rate would reduce the budget deficit more effectively. The disagreement between these economists is most likely due to Despite their differences, with which proposition are two economists chosen at random most likely to agree? O Rent ceilings reduce the quantity and quality of available housing. O Having a single income tax rate would improve economic performance. O Immigrants receive more in government…arrow_forward
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