In the context of fiscal policy and its impact on national debt, consider a government that decides to implement an expansionary fiscal policy during a period of high national debt. What is the most likely immediate impact of this policy on the country's debt-to-GDP ratio, assuming all other factors remain constant? A) The debt-to-GDP ratio will decrease due to increased economic growth. B) The debt-to-GDP ratio will increase as government spending adds to the debt. C) The debt-to-GDP ratio will remain unchanged as fiscal policy does not affect national debt. D) The debt-to-GDP ratio will first decrease then increase due to delayed inflationary effects. Don't use chatgpt please provide valuable answer
In the context of fiscal policy and its impact on national debt, consider a government that decides to implement an expansionary fiscal policy during a period of high national debt. What is the most likely immediate impact of this policy on the country's debt-to-GDP ratio, assuming all other factors remain constant? A) The debt-to-GDP ratio will decrease due to increased economic growth. B) The debt-to-GDP ratio will increase as government spending adds to the debt. C) The debt-to-GDP ratio will remain unchanged as fiscal policy does not affect national debt. D) The debt-to-GDP ratio will first decrease then increase due to delayed inflationary effects. Don't use chatgpt please provide valuable answer
Chapter17: Federal Deficits, Surpluses, And The National Debt
Section: Chapter Questions
Problem 8SQ
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In the context of fiscal policy and its impact on national debt, consider a government that decides to implement an expansionary fiscal policy during a period of high national debt. What is the most likely immediate impact of this policy on the country's debt-to-GDP ratio, assuming all other factors remain constant? A) The debt-to-GDP ratio will decrease due to increased economic growth. B) The debt-to-GDP ratio will increase as government spending adds to the debt. C) The debt-to-GDP ratio will remain unchanged as fiscal policy does not affect national debt. D) The debt-to-GDP ratio will first decrease then increase due to delayed inflationary effects. Don't use chatgpt please provide valuable answer
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Step 1: Introduce Fiscal Policy and Its Relation to National Debt
VIEWStep 2: Examine the Immediate Effect of Expansionary Fiscal Policy on Debt
VIEWStep 3: Consider the Impact of Economic Growth on the Debt-to-GDP Ratio
VIEWStep 4: Assess the Long-term Inflationary Impacts
VIEWStep 5: Conclusion
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