Consider a Government with an Outstanding Stock of Public Debt

question 27

Multiple Choice

Consider a government with an outstanding stock of public debt. If, in any given year, the government has a primary budget surplus and the real interest rate on government bonds is more than the growth rate of real GDP, then

• A)the effect on the debt- to- GDP ratio is uncertain.
• B)the debt- to- GDP ratio is certainly negative.
• C)the debt- to- GDP ratio will certainly fall.
• D)debt- service payments will be eliminated.
• E)the debt- to- GDP ratio will certainly rise.

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Definitions:

Parallel Circuit

An electrical circuit in which components are connected across common points or junctions, providing multiple paths for current to flow.

Apparent Power

The total power in an AC circuit, equal to the product of the root mean square voltage and current, measured in volt-amperes (VA).

Parallel Circuit

An electrical circuit in which the same voltage is applied across all components, with each component directly connected to the voltage source.

Inductive Reactance

The opposition that inductance presents to alternating current, depending on the frequency of the current and the inductance value, measured in ohms.