Multiple Choice
For a competitive equilibrium in a two-period model, which of the following is true?
A) each consumer picks first- and second-period consumption given the real interest rate
B) there must be an equal number of borrowers and lenders
C) the present value of government spending must be greater than the present value of taxes
D) the financial market clears
E) all deficits are financed by issuing debt
Correct Answer:
Verified
Correct Answer:
Verified
Q31: If the government reduces current taxes, government
Q32: Bonds are assumed to trade directly<br>A) through
Q33: Aggregate consumption is<br>A) positively related to savings.<br>B)
Q34: A consumer is a lender if<br>A) optimum
Q35: An increase in the real interest<br>A) increases
Q37: A good proxy for the flow of
Q38: Consumption smoothing refers to<br>A) the tendency of
Q39: A key variable in intertemporal choice is<br>A)
Q40: Distorting taxes can invalidate Ricardian equivalence because<br>A)
Q41: The Ricardian equivalence theorem implies that<br>A) government