Consider the following economy below in 2010 and 2020. Assume that the interest rate on the debt is 20%. What is the minimum tax rate needed to hold the debt in 2020? Year 2010 2020 Nominal Debt 1000 2500 Nominal GDP 4000 8000 Price Level/GDP Deflator 100 150 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 4.50% b 5.00% 6.25% d 7.00%
Monetary Policy and Interest Rate
Monetary policy refers to the policy which is enforced by the central bank of the country to control the money supply and economic development of the country. The main aim of monetary policy is to manage inflation, consumption, and growth of the economy. The central bank influences interest rates to manage the money supply. In monetary policy, the central bank may revise the interest rate to increase and decrease the flow of money.
Development of the US Monetary System
The monetary system of a country refers to the system in which a government provides money in the economy of the country. In the modern-day monetary system, usually it contains the National Treasury, the mint where the notes are being printed. The Central bank and the commercial banks regulate the money supply in the economy of a country.
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