If the Ricardian Equivalence Proposition Is Correct, Then an Increase

question 21

Multiple Choice

If the Ricardian equivalence proposition is correct, then an increase in the budget deficit will lead to:

• A) a decrease in investment spending.
• B) a lower standard of living in the future.
• C) a decrease in private saving.
• D) an increase in investment spending.
• E) an increase in private saving.

---

Definitions:

Metatarsals

The long bones in the foot that connect the ankle to the toes, important for walking and balance.

Sternum

The long, flat bone located in the center of the chest, connected to the ribs via cartilage, forming part of the rib cage.

Styloid Process

A slender, pointed piece of bone that extends down from the temporal bone of the skull, serving as an attachment point for muscles associated with the tongue and larynx.

Scapula

The shoulder blade, a flat, triangular bone located at the back of the shoulder, serving as an important site for muscle attachment.