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If Ricardian Equivalence Holds

Question 133

Multiple Choice

If Ricardian equivalence holds:


A) taxpayers respond to lower tax rates today with increased savings today.
B) taxpayers respond to lower tax rates today with increased spending today.
C) consumption smoothing is less important than when Ricardian equivalence doesn't hold.
D) changes in fiscal policy are more likely to have a larger impact on aggregate demand.

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