If Ricardian Equivalence Holds, Then an Expansionary Fiscal Policy Will

question 85

Multiple Choice

If Ricardian equivalence holds, then an expansionary fiscal policy will

• A) decrease aggregate demand in the short run.
• B) increase aggregate demand in the short run but not in the long run.
• C) increase aggregate demand in both the short run and in the long run.
• D) have no effect on aggregate demand either in the short or in the long run.

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