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:

Stakeholder Perspective

An approach in business and management that considers and addresses the interests and welfare of all parties affected by organizational decisions, including employees, customers, investors, and the community.

Shareholders

Individuals or entities that own shares in a corporation, thus having a financial interest and potentially a say in its operations.

Financialization

The increasing importance of financial markets, financial motives, financial institutions, and financial elites in the operation of the economy and its governing institutions.

Short Term Profits

Financial gains realized in a brief period, often prioritized over long-term sustainability.