Ricardian Equivalence Predicts

question 45

Multiple Choice

Ricardian equivalence predicts:

• A) that if governments cut taxes but not spending, people will not change their behavior.
• B) if people perceive current tax cuts to mean higher tax payments in the future, the cuts will have little expansionary effect.
• C) the consumers need to feel as though they will not have to pay in the future for current spending to make current tax cuts effective expansionary policy.
• D) All of these are true.