Question
Which of the following statements about Ricardian equivalence is / are correct?(could be multiple choice) A.The Ricardian view of national debt assumes that consumption depends
Which of the following statements about Ricardian equivalence is / are correct?(could be multiple choice)
A.The Ricardian view of national debt assumes that consumption depends not only on current but on permanent income.
B.The logic of Ricardian equivalence is that all fiscal policies are irrelevant. Changes in fiscal policy do not affect consumer spending if they affect current or future government spending on goods.
C.Proponents of the Ricardian view of fiscal policy assume that economic agents behave irrationally when making important decisions, such as the choice of the proportions of income that are consumed and saved.
D.The Ricardian equivalence implies that a credit-financed tax cut does not affect consumption.
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