An increase in taxes (when Ricardian equivalence doesn't hold) causes the real interest rate to ________ and the price level to ________ in general equilibrium.
a. fall; fall
b. rise; fall
c. fall; rise
d. rise; rise
Answer: A
An increase in taxes (when Ricardian equivalence doesn't hold) causes the real interest rate to ________ and the price level to ________ in general equilibrium.
a. fall; fall
b. rise; fall
c. fall; rise
d. rise; rise
If the answers is incorrect or not given, you can answer the above question in the comment box. If the answers is incorrect or not given, you can answer the above question in the comment box.