In Which of the Following Situations Does the Government NOT

question 70

Multiple Choice

In which of the following situations does the government NOT need to balance its budget?

• A) if nominal GDP grows faster than the growth in debt
• B) if nominal GDP grows slower than the growth in debt
• C) if inflation is zero
• D) if inflation is higher than the growth in debt

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Par

The face value of a bond or security, often used in the context of bonds trading at, above, or below their issued price.

Market Rate

The prevailing interest rate available in the marketplace for similar financial instruments or loans.

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The amount that will be payable to the holder of a financial instrument at its maturity date, including principal and interest.