Ricardian equivalence suggests that forward looking households ________ the future taxes required to pay off government debt, so that reductions in lump-sum taxes have ________ effect on the economy

Loopholes reduce the efficiency of the tax system

a. True b. False Indicate whether the statement is true or false

Which of the following would not be a consequence of an increase in the U.S. government budget deficit?

a. the U.S. trade balance rises b. the U.S. interest rate rises c. domestic investment in the U.S. falls d. the real exchange rate of the U.S. dollar appreciates