If __________ hold(s),then holding the present value of government spending constant,budget deficits will not crowd out investment.

Question

Quizplus · Accepted Answer

The statement is based on the Ricardian Equivalence theory, which is not listed among the options. This theory suggests that budget deficits do not affect the level of investment if consumers anticipate future taxes to pay off the debt, thus saving more to offset government borrowing.

If __________ Hold(s),then Holding the Present Value of Government Spending