5. The economic stimulus of deficit spending is based on money illusion. When the government issues bonds

Question:

5. "The economic stimulus of deficit spending is based on money illusion. When the government issues bonds to finance its deficit, it is promising to levy future taxes so that future taxation for current taxation. The stimulus results because taxpayers, failing to recognize fully their greater future tax liability, are deceived into thinking that their wealth has increased. Thus, they increase their current spending." Is this view correct?
Why or why not?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Macroeconomics Private And Public Choice

ISBN: 9780123110701

2nd Edition

Authors: James D Gwartney; Richard Stroup; A H Studenmund

Question Posted: