Supposing Ricardian Equivalence Holds, an Increase in Current Taxes

question 20

Multiple Choice

Supposing Ricardian equivalence holds, an increase in current taxes

• A) increases current aggregate consumption.
• B) reduces current aggregate consumption.
• C) reduces current saving.
• D) increases government spending.
• E) reduces future aggregate consumption.

---

Definitions:

Explicit

Clearly stated, defined, or detailed, leaving no room for confusion or interpretation.

Tacit

Knowledge or understanding that is implied or understood without being stated openly, often acquired through experience rather than formal instruction.

Verbal

Pertaining to words and the use of words in communication, both spoken and written.

Creative Ability

Creative ability refers to the capacity to generate innovative ideas, solutions, or artistic expressions, which are novel and valuable.