Consider a Government with a Positive Stock of Debt

question 113

Multiple Choice

Consider a government with a positive stock of debt.If the growth rate of real GDP exceeds the real rate of interest on government bonds,then to keep the debt-to-GDP ratio constant the

• A)government must have a primary budget deficit.
• B)government must have a primary budget surplus.
• C)government must implement an expansionary fiscal policy.
• D)money supply should be increased at a constant rate.
• E)nominal interest rate must be constant.

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