Suppose that the debt-to-GDP ratio is 0.59, the real interest rate on the debt is 8%, and the growth rate of real GDP is 3%. What is the maximum primary deficit or surplus (as a percentage of GDP) that the government can run and not increase the debt-to-GDP ratio? A. 2.95% surplus O B. 4.72% surplus OC. 4.72% deficit O D. 2.95% deficit

Suppose that the debt-to-GDP ratio is 0.59, the real interest rate on the debt is 8%, and the growth rate of real GDP is 3%. What is the maximum primary deficit or surplus (as a percentage of GDP) that the government can run and not increase the debt-to-GDP ratio? A. 2.95% surplus O B. 4.72% surplus OC. 4.72% deficit O D. 2.95% deficit

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter31: The Impacts Of Government Borrowing

Section: Chapter Questions

Problem 7RQ: Based on the national saving and investment identity, what are the three ways the macroeconomy might...

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