If Ricardian equivalence is true, and the government raises taxes (holding spending constant), how does the average person’s behavior change? In other words, how does he or she react to a tax increase?

If Ricardian equivalence is true, and the government raises taxes (holding spending constant), how does the average person’s behavior change? In other words, how does he or she react to a tax increase?

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Debates In Macroeconomics Over The Rolse And Effects Of Government

Section: Chapter Questions

Problem 4QP

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If Ricardian equivalence is true, and the government raises taxes
(holding spending constant), how does the average person’s behavior
change? In other words, how does he or she react to a tax increase?

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