3. If Ricardian Equivalence holds and the government postpones temporarily building a

bridge that had been planned for a long time because of a personnel shortage:

a. Households may reduce their consumption today because the present discounted

value of taxes is now higher than previously expected.

b. Households will do nothing since the present discounted value of taxes is unchanged.

c. Households will do nothing because Ricardian Equivalence says nominal variables

don't affect real variables.

d. The economy will be in a recession due to higher government spending.