'Rational households'. In particular, households must be ‘forward looking’ and understand the government budget constraint. While it is easy to imagine that there may be ‘irrational’ households operating in the real world, one would have to question whether these households influence aggregate expenditure in a quantitatively important way.
It is equally apparent by the fact that households save that they are forward looking. And judging by the political controversy generated by budget deficits, it seems hard to believe that households are generally not aware of the government budget constraint.
