One objection to the notion of Ricardian Equivalence is that ________.

Question

Quizplus · Accepted Answer

Ricardian Equivalence suggests that consumers anticipate future taxes related to government borrowing and thus save any tax cuts to pay for future tax increases, rather than spending the money. The objection that individuals are short-sighted in their spending decisions challenges this theory by suggesting that people may not save for future tax increases, undermining the concept of Ricardian Equivalence.

One Objection to the Notion of Ricardian Equivalence Is That