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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