If the government reduces current taxes,government bonds increase,and according to Ricardian equivalence in the credit market
A) the supply curve of private savings shifts to the left to keep the real interest rate constant.
B) the real interest rate increases.
C) private savings decreases by an amount equal to the increase in government bonds.
D) the supply curve of private savings shifts right to keep the real interest rate constant.
E) the supply curve of private savings shifts to the right and the real interest rate increases.
Correct Answer:
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