Consider the Following Data About Government Debt and Deficit in a Given

question 85

Multiple Choice

Consider the following data about government debt and deficit in a given year: - real interest rate on government bonds = 3%
- growth rate of real GDP = 3%
- current debt-to-GDP ratio = 25%
- primary budget surplus as a percentage of GDP = 2%
Over this one-year period,the debt-to-GDP ratio will have

• A)remained unchanged.
• B)risen by 0.2 percentage points.
• C)fallen by 0.2 percentage points.
• D)risen by 2 percentage points.
• E)fallen by 2 percentage points.

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Definitions:

Budgeted Balance Sheet

A prediction of a company’s financial position at the end of a specified period, incorporating anticipated assets, liabilities, and equity based on the budget.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period to manage liquidity and ensure adequate cash flow.

Financial Budgets

Plans that outline an organization's expected revenues, expenditures, and financial objectives for a specific period.