When there are credit market frictions, Ricardian equivalence may not

When there are credit market frictions, Ricardian equivalence may not hold because

A) consumers cannot understand the implications of the government budget constraint.
B) a tax cut in the present with a future increase in taxes works effectively like a loan.
C) an increase in government saving is matched one-for-one by a decrease in private saving.
D) social security is fully-funded.

ANSWER

B