Suppose the Government's Objective Is to Hold Its Debt- To-

question 13

Multiple Choice

Suppose the government's objective is to hold its debt- to- GDP ratio constant at its current level of 30 percent. If the real interest rate on government bonds is 4 percent and the growth rate of real GDP is 2 percent, the government must

• A)run an overall budget surplus of 6.0 percent of GDP.
• B)run a primary budget surplus of 0.6 percent of GDP.
• C)run a primary budget deficit of 0.6 percent of GDP.
• D)run an overall budget deficit of 6.0 percent of GDP.
• E)balance the overall budget.

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Definitions:

Wernicke's Area

A region of the brain important for language development, located in the temporal lobe.

Dominant Hemisphere

Refers to the side of the brain that is primarily responsible for language and fine motor skills in most people, typically the left hemisphere for right-handed individuals.

Left Hemisphere

The left side of the brain, typically associated with analytical tasks, language processing, and logical reasoning.

Complex Information

Data or knowledge that consists of multiple interconnected parts, making it challenging to process or understand.