All else equal, Ricardian equivalence predicts that people in an economy will have a low marginal propensity to consume in response to a tax cut.
When there is a tax cut financed by government borrowing the consumer anticipate that the future taxes will rise. Therefore, their lifetime income remains unchanged and so consumer spending remains unchanged due to which people have a low marginal propensity to consume in response to a tax cut. bearing on a margin. located at the border or edge. on the outer or decrease limits; minimum for requirements; nearly insufficient: marginal subsistence; marginal ability. written or revealed withinside the margin of a page: a marginal note.
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