If the Government Runs a Primary Deficit in Year Zero

question 76

Multiple Choice

If the government runs a primary deficit in year zero of B₀,and,in year 1,decides to stabilize the debt (i.e.,prevent the deficit from rising any further) ,then in year 1 and beyond,it must run a primary surplus equal to

• A)zero.
• B)B₀.
• C)(1 + r)B₀.
• D)r)
• E) none of the above

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Definitions:

Empower Children

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