Question 10 (1 point) David Ricardo, the 19th century English economist, hypothi

Question

Question 10 (1 point) David Ricardo, the 19th century English economist, hypothized that private savings adjust to accommodate changes budgetary surpluses and deficits. This is the Ricarian Equivilence and over the centuries it has been shown to be ki Mi A) nearly always right B) sometimes right C) seldom right Sa D) never right Save Question 11 (1 point) A country that maintains a large deficit for a long time will A) have a contented population B) enjoy have a large trade surplus C) will eventually lose the confidenence of foreign investors D) find that this can never happen

Explanation / Answer

Q10) The Ricardian equivalence has been emprically tested by many scholars and it is found to be barely experienced in the period tested. Data reveals that people do not behave in the way the hypothesis dictates. Option C

Q11) Large budgetary deficits for a long period of time impedes the ability of the government to borrow as its debt is already higher. This also implies that investors no longer believe in credibility of nation to repay its debt. Option C

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