If the Ricardian Equivalence Were True, the Effect of an Increase

question 62

Multiple Choice

If the Ricardian Equivalence were true, the effect of an increase in government expenditure

• A) will increase investment by the amount of the increased government spending.
• B) will increase investment by more than the increase in government spending.
• C) will have no effect on investment.
• D) will decrease investment by the amount of the government spending.