According to the Ricardian equivalence proposition, a reduction in the current (lump-sum) taxation of household income:
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DSE 2016 Question 35: Fiscal and monetary policy effectiveness
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Fiscal and monetary policy effectiveness has come up 30 times in 7 exams since 2010.
What this question tests
This question is on Fiscal policy, stabilisers and Ricardian equivalence, part of Fiscal and monetary policy effectiveness in Macroeconomics.
The tools of fiscal policy, how the budget stabilises the economy on its own, and when deficits do not matter.
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