Consider the Government's Debt-To-GDP Ratio

question 73

Multiple Choice

Consider the government's debt-to-GDP ratio.A significant reason for a government to maintain a low debt-to-GDP ratio is so that

• A)the real interest rate remains high,which leads to increased investment.
• B)the Canadian dollar will appreciate and net exports will increase.
• C)the government has the flexibility to use expansionary fiscal policy if the economy enters a recession.
• D)the Bank of Canada has the flexibility to use contractionary policy.
• E)there is no "crowding in" of investment or net exports.

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