Question 8 3 pts During both the Ronald Reagan and George W. Bush administrations, tax cuts and rising deficits occurred concurrently. However, the effect of these policies on private savings was inconsistent with the Ricardian Equivalence Hypothesis (REH) which predicts that private savings would increase by roughly the same amount as the increase in government savings. Which of the following statements describes the least likely cause of these Ricardian failures? The casues described in the other statements are equally likely causes of these Ricardian failures. The REH assumes that credit markets are free of imperfections so agents whose optimal plans call for them to borrow, can do so at prevailing market interest rates and so do not face liquidity constraints. However, the empirical evidence suggests that approximately 20 percent of US households contend with liquidity constraints. The REH assumes that optimizing economic agents have infinite planning horizons however, at least some agents have finite planning horizons. The REH assumes that economic agents consider the future implications of their current actions when making resource allocation decisions. However, the empirical evidence suggests that most economic agents do not