Assume an economy with zero interest and inflation rates. Also assume that the theory of Ricardian equivalence is correct, i.e. people are rational and practice foresight. How will people's consumption pattern change if the current tax system is replaced with a lifetime one-time tax?

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The Answer of Assume an economy with zero interest and inflation rates. Also assume that the theory of Ricardian equivalence is correct, i.e. people are rational and practice foresight. How will people's consumption pattern change if the current tax system is replaced with a lifetime one-time tax?

Assume an Economy with Zero Interest and Inflation Rates