In a Two-Period Model, Holding Everything Else Constant, an Increase

question 44

Multiple Choice

In a two-period model, holding everything else constant, an increase in future taxes

• A) unambiguously increases the current account surplus.
• B) unambiguously decreases the current account surplus.
• C) has an uncertain effect on the current account surplus.
• D) increases the present value of taxes.
• E) has no effect on the current account surplus, as long as Ricardian equivalence holds.

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