Suppose real GDP is constant. If the government's fiscal policy objective is to keep the size of the outstanding public debt at its current level, it must: O a. Have a structural budget surplus equal to the outstanding public debt O b. Cut taxes and cut expenditures by equal amounts to make a balanced change in the budget Cut taxes and raise expenditures to increase the budget deficit Od. Have a structural primary budget surplus equal to its interest payments on the public debt
Suppose real GDP is constant. If the government's fiscal policy objective is to keep the size of the outstanding public debt at its current level, it must: O a. Have a structural budget surplus equal to the outstanding public debt O b. Cut taxes and cut expenditures by equal amounts to make a balanced change in the budget Cut taxes and raise expenditures to increase the budget deficit Od. Have a structural primary budget surplus equal to its interest payments on the public debt
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section: Chapter Questions
Problem 1DQ
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![Suppose real GDP is constant. If the government's fiscal policy objective is to keep the size of the outstanding public debt at its current
level, it must:
O a.
Have a structural budget surplus equal to the outstanding public debt
Ob. Cut taxes and cut expenditures by equal amounts to make a balanced change in the budget
Oc.
Cut taxes and raise expenditures to increase the budget deficit
Od.
Have a structural primary budget surplus equal to its interest payments on the public debt](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F868b8534-4d89-4d63-908b-b662dc9aeef4%2F1da836ff-5097-4664-88ad-347219126f3a%2F47t0m7p_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose real GDP is constant. If the government's fiscal policy objective is to keep the size of the outstanding public debt at its current
level, it must:
O a.
Have a structural budget surplus equal to the outstanding public debt
Ob. Cut taxes and cut expenditures by equal amounts to make a balanced change in the budget
Oc.
Cut taxes and raise expenditures to increase the budget deficit
Od.
Have a structural primary budget surplus equal to its interest payments on the public debt
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