An Increase in Taxes (When Ricardian Equivalence Doesn't Hold)causes the Real

question 8

Multiple Choice

An increase in taxes (when Ricardian equivalence doesn't hold) causes the real interest rate to ________ and the price level to ________ in general equilibrium.

• A)rise; rise
• B)rise; fall
• C)fall; rise
• D)fall; fall

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