Suppose That a Country Has an Inflation Rate of About

question 113

Multiple Choice

Suppose that a country has an inflation rate of about 5 percent per year and a real GDP growth rate of about 2 percent per year.What is the highest deficit the government can afford without raising the debt-to-income ratio?

• A) about 2 percent of GDP
• B) about 7 percent of GDP
• C) about 9 percent of GDP
• D) about 12 percent of GDP

---

Definitions:

Faulty Battery Pack

A faulty battery pack is a defective set of battery cells that are not performing as intended, potentially causing operational issues or safety hazards in electronic devices.

Perfect Tender Rule

is a legal principle that requires sellers to deliver goods to buyers that exactly meet the terms of their contract, without any deviations or defects.

Trade Usage

Established practices or methods regularly observed and accepted in a particular industry or trade.

Course of Performance

The manner and history of conduct between parties in a contract that can be used to interpret their agreement's terms.