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When economists use Ricardian Equivalence, what reasoning is behind it? Households consider future ramifications of current government policies and adjust their savings/spending accordingly which decreases
When economists use Ricardian Equivalence, what reasoning is behind it?
- Households consider future ramifications of current government policies and adjust their savings/spending accordingly which decreases the effectiveness of fiscal policy.
- Households consider future ramifications of current government policies and adjust their savings/spending accordingly which decreases the effectiveness of fiscal policy.
- Supply and household savings are not affected by tax cuts.
- Supply and household savings are not affected by tax cuts.
- Increasing household consumption is the goal as government increases spending and decrease household savings.
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