According to the Theory of Ricardian Equivalence,if Consumers Are Forward-Looking,they

question 61

Multiple Choice

According to the theory of Ricardian equivalence,if consumers are forward-looking,they will view a tax cut that has no plans to reduce government spending as ______,so their consumption will ______.

• A) additional disposable income; increase.
• B) additional disposable income; remain unchanged.
• C) a rescheduling of taxes into the future; increase.
• D) a rescheduling of taxes into the future; remain unchanged.

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Definitions:

Buffer

A person or thing that reduces the impact of a shock or disturbance, or in computing, a temporary memory storage that holds data.

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