Suppose That at the Start of Fiscal Year 2019 the Government

question 46

Multiple Choice

Suppose that at the start of fiscal year 2019 the government had a debt of $6060 billion. Suppose that during the same fiscal year, real GDP grew by about 3 percent and inflation was about 2 percent. What is the largest deficit the government could have run without raising the debt-to-GDP ratio?

• A) about $122 billion
• B) about $184 billion
• C) about $243 billion
• D) about $303 billion

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Definitions:

Expenses

Costs incurred in the undertaking of a business or the execution of a task.

Gross Returns

Total revenue generated by an investment before any deductions for expenses or taxes.

Non-Profit Charity

An organization dedicated to furthering a particular social cause or advocating for a shared point of view, without profit as its primary motive.

Commission

A fee or percentage of a transaction paid to an agent for facilitating or conducting a sale or service.