Classify the statements as true orfalse.

If the government pays for increases in spending by increasing taxes proportionately, then the interest rate will rise and cause private investors to investless.

If there is an increase in imports and no accompanying change in either savings or investment, then government debt willincrease.

According to the Ricardian equivalence theory, an increase in the government budget deficit might increase privatesavings.

If government spending increases and saving and investment remain the same, then there must be an increase in the tradedeficit.

Government can increase research and development investment by spending money itself or through taxincentives.