The Ricardian Equivalence Argument Says That Households and Businesses View

question 198

True/False

The Ricardian equivalence argument says that households and businesses view any increase in government spending as a sign that tax burdens will increase in the future, which will cause a decrease in private spending in anticipation of higher future taxes.

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Definitions:

Volunteer

An individual who offers services or efforts willingly and without financial compensation.

Mere Exposure Effect

A psychological phenomenon by which people tend to develop a preference for things merely because they are familiar with them.

Attraction To Object

The phenomenon of being drawn or having a preference towards a specific physical object or item.

Encounter

An event or situation in which two or more individuals or entities come into contact with or confront each other, leading to interaction or exchange.