Correct option is C
The correct answer is (c) equivalent
According to David Ricardo, during a high deficit situation, taxation and borrowing are equivalent means of spending. This concept stems from his theory on public finance, which suggests that whether the government finances its expenditures through taxation or through borrowing, the economic effect is essentially the same in terms of resource allocation and impact on the economy. This idea is also related to what is later termed as the "Ricardian equivalence" proposition, suggesting that it doesn't matter whether a government finances its spending with debt or taxes; the economic outcomes will be similar.
English
80 Questions
160 Marks
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