Multiple Choice
Given a reduction in income tax withheld, but no change in income tax owed, households that act according to Ricardian equivalence would ______ the extra take-home pay, while those facing binding borrowing constraints would ______ the extra-take home pay.
A) spend; spend
B) spend; save
C) save; save
D) save; spend
Correct Answer:
Verified
Correct Answer:
Verified
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