In contrast to the functional finance view, Classical sound finance macroeconomics assumes that individuals:
A)do not adjust their spending to account for future tax payments.
B)adjust their spending to account for future tax payments.
C)do not adjust their spending to account for future incomes.
D)adjust their spending to account for future incomes.

Question

Quizplus · Accepted Answer

Classical sound finance macroeconomics assumes that individuals are forward-looking and adjust their spending to account for future tax payments, reflecting the principle of Ricardian equivalence. This contrasts with the functional finance view, which suggests that government budget policies can affect aggregate demand directly.

In Contrast to the Functional Finance View, Classical Sound Finance