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Assume that we have Ricardian equivalence. This implies that consumption depends on expected life- time incomes and that individuals understand the government's intertemporal budget restriction.
a) How will consumption be affected by a tax reduction today if future government consumption is assumed not to be affected? Motivate your answer using the intertemporal budget restrictions that households and the government are facing!
b) Is Ricardian equivalence a reasonable description of reality?
what is the opportunity cost of investing in capital do you think a country can overinvest in capital what is the opportunity cost of investing in human capital do you think a country can overinvest in human capital
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The production engineers at Impact Industries have derived the optimal combinations of labor and capital (the only two inputs used by Impact) for three levels of output: 120, 180, and 240 units of output:
In the 1992 presidential elections, Ross Perot was speaking of NAFTA, which both of the other candidates (George H.W. Bush and Bill Clinton) supported. He made the statement about NAFTA ‘that giant sucking sound you hear will be your jobs being se..
If this country wants to reduce its inflation rate, state which of the following monetary regimes is least likely to succeed: exchange rate target, money supply target, nominal interest rate policy. Which approach is most likely to succeed
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