According to Ricardian equivalence, taxation and government borrowing have the same effect on spending in the private sector

According to the theory of rational expectations, expansionary fiscal policy that is anticipated will:

a. cause wage expectations to adjust downward immediately following the lower price level. b. increase the real wage rate in the long run. c. cause a permanent decline in the natural rate of unemployment. d. decrease the real wage rate in the long run. e. cause wage expectations to adjust upward immediately following the higher price level.

The Social Security system is currently generating tax revenues that exceed the benefits paid to recipients. This surplus is

a. being invested in foreign bonds, which will provide Americans with a source of income when the baby boom generation retires. b. separated from other government revenue so politicians will not spend the money during the current period. c. being channeled into earmarked private savings accounts. d. invested in government bonds, the redemption of which will require an increase in taxes (or additional Treasury borrowing).