An Important Reason Why Ricardian Equivalence May Fail Is If

question 51

Multiple Choice

An important reason why Ricardian equivalence may fail is if

• A)real interest rates start to increase.
• B)state and local governments also engage in debt finance.
• C)some consumers are borrowers, while other consumers are lenders.
• D)borrowing and lending is done through intermediaries.
• E)government debt incurred today may not be paid off until after some current consumers are deceased.