Suppose That a Country Has an Inflation Rate of About

question 163

Multiple Choice

Suppose that a country has an inflation rate of about 2 percent per year and a real GDP growth rate of about 3 percent per year. Then the government can have a deficit of about

• A)6 percent of GDP without raising the debt-to-income ratio.
• B)5 percent of GDP without raising the debt-to-income ratio.
• C)1.5 percent of GDP without raising the debt-to-income ratio.
• D)1 percent of GDP without raising the debt-to-income ratio.

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Definitions:

Levels-of-processing Model

A cognitive psychology theory that suggests memory retention of information is influenced by the depth of processing, with deeper levels of analysis producing more durable memory.

Deeper Level

Indicates an analysis or understanding that goes beyond the surface to understand underlying meanings or principles.

Shallower Level

A term that could refer to understanding or processing something at a more superficial or less complex level.

Maintenance Rehearsal

A cognitive strategy that involves repetitively reviewing information to retain it in short-term memory.