Ricardian Equivalence Argues That When the Government Cuts Taxes and Raises

question 25

Multiple Choice

Ricardian equivalence argues that when the government cuts taxes and raises its deficit,

• A) consumers anticipate that they will face lower taxes later to pay for the resulting government debt.
• B) consumers anticipate that they will higher services from the government.
• C) consumers anticipate that they will face higher taxes later to pay for the resulting government debt.
• D) consumers anticipate it will affect their future taxes, in general in the direction of lowering future taxes.
• E) consumers anticipate that the low tax rates will continue.