What did the sound finance approach to fiscal policy use to support its view?
A)Keynesian economics
B)A history of successful procyclical fiscal policy
C)The functional finance view
D)The Ricardian equivalence theorem

Question

Quizplus · Accepted Answer

The sound finance approach to fiscal policy, which advocates for balanced budgets and minimal government debt, is supported by the Ricardian equivalence theorem. This theorem suggests that government borrowing and taxation are equivalent in their effect on the economy, as rational consumers anticipate future taxes to pay off government debt and thus save more, offsetting the stimulative effect of government spending.

What Did the Sound Finance Approach to Fiscal Policy Use