If Ricardian Equivalence Proposition Is True,a Budget Deficit Resulting from a Tax

question 21

Multiple Choice

If Ricardian equivalence proposition is true,a budget deficit resulting from a tax cut will have

• A)no effect on government expenditures.
• B)no effect on current account because it does not affect national saving.
• C)no effect on current account because people expect to pay lower taxes in the future.
• D)no effect on current account because people expect to increase their consumption.

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Definitions:

Monetary Benefits

The financial gains or profits derived from an investment, project, or activity.

Skills Enhancement

The process of improving existing skills or acquiring new ones to perform better in tasks or jobs.

Psychomotor Skills

Involve the relationship between cognitive functions and physical movement, pertinent in learning activities that require manual dexterity and coordination.

Technical Skills

Specific abilities or expertise in particular areas or fields, often related to technical or scientific tasks, operations, or activities.