Economics · Macroeconomics
'Rational individuals will recognize that an increase in government spending funded by borrowing must be repaid in the future with higher taxes, prompting them to increase savings and reduce current consumption.' This statement explains which economic concept?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Wicksell Effect
- 2Tobin Effect
- 3Ricardian Equivalence Theorem✓
- 4Keynes Effect
Correct answer
Ricardian Equivalence Theorem
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