Q41 The Ricardian equivalence theorem assumes that an increase in thegovernment budget deficit created by a tax cut willO increase real GDP in both the short and long run.O decrease real GDP in both the short and long run.decrease real GDP in the short run, but increase it in the long run.O have no effect on aggregate demand.

Have no effect on aggregate demand --- is correct

Answered: The Ricardian equivalence theorem…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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