Suppose the Real Interest Rate on Government Bonds Is 5

question 43

Multiple Choice

Suppose the real interest rate on government bonds is 5% while the growth rate of real GDP is 4%,and that the government's current debt-to-GDP ratio is 30%.If the government has a primary budget balance of zero in the current year,the debt-to-GDP ratio will

• A)rise by 3.0 percentage points.
• B)rise by 0.3 percentage points.
• C)remain unchanged.
• D)fall by 3.0 percentage points.
• E)fall by 0.3 percentage points.

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Definitions:

Salesvolume

Sales volume refers to the number of units of a product or service sold by a company in a specified period.

Pay Period

The span of time over which an employee's work hours are recorded and paid.

Class Average

The mean score of a group of students in a particular class or subject.

Business Mathematics

The study of mathematical methods and tools used in business and finance to analyze and solve problems.