Suppose That a Country Has an Inflation Rate of About

question 67

Multiple Choice

Suppose that a country has an inflation rate of about 2 percent per year and a real growth rate of about 3 percent per year. Suppose also that it has nominal GDP of about 100 billion units of currency. What is the highest deficit it can have without raising the debt-to-income ratio?

• A)just under 2 billion units
• B)just under 3 billion units
• C)just under 5 billion units
• D)just under 6 billion units

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