The Ricardian Equivalence Theorem Implies That

question 41

Multiple Choice

The Ricardian equivalence theorem implies that

• A) government debt policy must be handled correctly for the economy to prosper.
• B) the amounts of government spending are neutral.
• C) an increase in government spending has no effect on the economy, as long as there is an equal change in taxes.
• D) the timing of taxes collected by the government is neutral.
• E) the present value of government spending must be equal to the present value of taxes.

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