The idea that government budget deficits do NOT matter under certain circumstances is
A)preposterous.
B)called the Milton Friedman theory.
C)called the Friedman-Lucas theory.
D)called the Ricardian equivalence theorem.
E)attributed to Edward Prescott and Finn Kydland.

Question

Quizplus · Accepted Answer

The idea that government budget deficits do not matter under certain circumstances is called the Ricardian equivalence theorem, which suggests that consumers will adjust their savings behavior to offset any deficits incurred by the government to maintain a balanced level of consumption and saving.

The Idea That Government Budget Deficits Do NOT Matter Under