A country is growing at 3% and has a debt/GDP ratio of 50%. Assuming no money financing, what is the primary budgetdeficit/surplus that keeps the debt/income ratio constant when (i) The real interest rate is 2%?(ii) The real interest rate is 5%?

A real interest rate is one that has been adjusted for inflation, reflecting the real cost of funds…

A country is growing at 3% and has a debt/GDP ratio of 50%. Assuming no money financing, what is the priímary budget deficit/surplus that keeps the debt/income ratio constant when (i) The real interest rate is 2%?(i) The real interest rate is 5%?

A country is growing at 3% and has a debt/GDP ratio of 50%. Assuming no money financing, what is the priímary budget deficit/surplus that keeps the debt/income ratio constant when (i) The real interest rate is 2%?(i) The real interest rate is 5%?

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter16: Budget Deficits In The Short And Long Run

Section: Chapter Questions

Problem 1DQ

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A country is growing at 3% and has a debt/GDP ratio of 50%. Assuming no money financing, what is the primary budget
deficit/surplus that keeps the debt/income ratio constant when (i) The real interest rate is 2%?(ii) The real interest rate is 5%?

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