The Ricardian Equivalence Theorem States That

The Ricardian equivalence theorem states that

A) the effects of an increase in government spending are equivalent to the effects of an increase in the money supply.
B) an increase in government spending financed by higher taxes has no effect on aggregate demand.
C) spending on national defense is a direct expenditure offset.
D) government spending financed by taxes is equivalent to government spending financed by borrowing.