The Logic of Ricardian Equivalence Implies That

question 16

Multiple Choice

The logic of Ricardian equivalence implies that:

• A) tax cuts do not influence consumer spending but changes in government spending do.
• B) neither tax cuts nor changes in government spending affect consumer spending.
• C) tax cuts combined with future decreases in government spending will decrease consumer spending.
• D) if the government cuts taxes and increases current government spending, consumer spending will increase.

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Definitions:

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