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The Figure Given Below Depicts the Macroeconomic Equilibrium in a Country.?Figure

Question 23

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The figure given below depicts the macroeconomic equilibrium in a country.?Figure 11.3
The figure given below depicts the macroeconomic equilibrium in a country.?Figure 11.3    -Refer to Figure 11.3. Assume that the increase in aggregate demand from AD₁ to AD₂ was the result of government spending that was financed by borrowing. Assuming that the Ricardian equivalence holds and people expect taxes to rise in future, the equilibrium income will be: A)  $800. B)  less than $500. C)  more than $800. D)  less than $700. E)  $700.
-Refer to Figure 11.3. Assume that the increase in aggregate demand from AD₁ to AD₂ was the result of government spending that was financed by borrowing. Assuming that the Ricardian equivalence holds and people expect taxes to rise in future, the equilibrium income will be:


A) $800.
B) less than $500.
C) more than $800.
D) less than $700.
E) $700.

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