The tendency for private saving to increase in response to growing government deficits is known as the
A)money illusion effect.
B)Keynes effect.
C)Ricardo- Barro effect.
D)crowding- out effect.

Question

Quizplus · Accepted Answer

The Ricardo-Barro effect, also known as Ricardian equivalence, suggests that when a government increases its deficit, individuals anticipate future taxes to pay off the debt and thus increase their savings to offset the expected future tax burden.

The Tendency for Private Saving to Increase in Response to Growing