The Barro-Ricardo Equivalence Proposition Implies That Tax Cuts

Multiple Choice

The Barro-Ricardo equivalence proposition implies that tax cuts

A) always lead to a reduction in the budget deficit
B) always lead to the crowding out of investment spending
C) that lead to higher budget deficits do not stimulate consumption since people will save in anticipation of future tax increases
D) provide important incentives for economic growth
E) ease people's liquidity constraints so they consume more