The Theory That Government Borrowing May Function Like an Increase

question 123

Multiple Choice

The theory that government borrowing may function like an increase in taxes is known as

• A) the marginal propensity to consume.
• B) the Ricardian equivalence theorem.
• C) planned tax policy.
• D) Congressional Tax policy.

---

Definitions:

Developed Countries

Nations with high levels of economic productivity, advanced infrastructure, and higher standards of living.

Technology

The application of scientific knowledge for practical purposes, especially in industry, which can significantly influence productivity and economic growth.

Capital

Wealth in the form of money or other assets owned or used by a person or organization for a particular purpose such as investment in productive projects.

Foreign Exchange Reserve

Holdings of foreign currencies and precious metals by a country's central bank or monetary authority, used to back its liabilities and influence monetary policy.