Ricardian equivalence can be said to hold if:

a.government spending activities financed by taxation and those financed by borrowing have the same effect on private spending.b.taxation has a lesser effect on private spending than government borrowing.c.government spending activities financed by taxation and those financed by borrowing have no effect on private spending.d.government borrowing does not affect private consumption while taxation has a negative impact on private consumption.e.taxation has greater effect on private spending than government borrowing.

The rate of interest that the Federal Reserve charges on loans to member banks is the:

a.discount rate.b.federal funds rate.c.prime interest rate.d.reserve lending rate.e.open market rate.

Which of the following will occur if the government increases spending, keeping other things constant?

a.The aggregate demand curve will shift to the right.b.The average price level will increase.c.The aggregate demand curve will decrease.d.The level GDP will drop.e.The marginal propensity to consume will increase.

A decrease in the discount rate:

a.increases the money supply.b.leads to an increase in the interbank rate charged by commercial banks.c.increases reserve holdings of the commercial banks.d.causes an increase in the federal funds rate.e.decreases the money supply.