If the Ricardian Equivalence were true, the effect of an increase in government expenditure:
A. is the same regardless on whether it is financed by borrowing or by taxation.
B. is the better it is financed by borrowing instead of taxation.
C. is the better it is financed by taxation instead of borrowing.
D. is effective only if done both by borrowing and by taxation.
Answer:A
If the Ricardian Equivalence were true, the effect of an increase in government expenditure:
A. is the same regardless on whether it is financed by borrowing or by taxation. B. is the better it is financed by borrowing instead of taxation. C. is the better it is financed by taxation instead of borrowing. D. is effective only if done both by borrowing and by taxation.