Adding government to the Barro model affects the household budget constraint by
a. adding the present value of real transfers net of real taxes as a source of funds.
b. adding the present value of real transfers plus real taxes as a use of funds.
c. adding and subtracting the present value of real transfers net of real taxes as a source of funds, for no net effect.
d. subtracting the present value of real transfers net of real taxes as a use of funds.
Answer: a. adding the present value of real transfers net of real taxes as a source of funds.
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