Suppose That a Country Has an Inflation Rate of About

question 5

Multiple Choice

Suppose that a country has an inflation rate of about 3 percent per year and a real growth rate of about 5 percent per year. Suppose also that it has nominal GDP of about 100 billion units of currency. What is the highest possible deficit it can have without raising the debt-to-income ratio?

• A) just under 3 billion units
• B) just under 5 billion units
• C) just under 8 billion units
• D) just under 15 billion units

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Definitions:

Bottlecap Refund

A system where consumers are reimbursed a small amount for returning bottle caps to incentivize recycling and reduce waste.

Consumer Publication

A type of media, such as magazines or newsletters, designed to inform and entertain consumers on topics of interest like technology, health, or lifestyle.

Advertising Budget

The amount of money allocated by a business to spend on advertising over a certain period.

Entire Income

The total amount of earnings, including wages, salaries, bonuses, and other income sources, received by an individual or household.