The Implication of Ricardian Equivalence Is That If the Government

Multiple Choice

The implication of Ricardian equivalence is that if the government increases expenditures without increasing taxes, the increase in government expenditures will be:

A) at least partially offset by a reduction in consumer spending.
B) enhanced by an increase in consumer spending.
C) more than offset by a reduction in firm spending.
D) enhanced by the multiplier effect.
E) instantly offset by automatic stabilizers.