The "Ricardo Effect" suggests that "soft money" economic conditions will incentivize firms to increase their: a

The correct answer is B.

Due to "soft money" financial circumstances, companies will be encouraged to raise their (b) variable costs. Soft money involves the funds set aside to promote a particular candidate through political party donations. Because the funds are usually directed to advertise a candidate, they are significantly unregulated. Since the "Ricardo Effect" suggests that companies should increase their savings level, variable costs will work best for companies that need to save in the "soft money" financial circumstances.

Moreover, the "soft money" is considered a non-governmental contribution, meaning spending by the government is low.