Suppose That at the Start of Fiscal Year 2006 the Government

question 83

Multiple Choice

Suppose that at the start of fiscal year 2006 the government had a debt of $6800 billion. Suppose that during fiscal year 2006, real GDP grew by about 5 percent and inflation was about 3 percent. What is the largest deficit the government could have run without raising the debt-to-GDP ratio?

• A)about $544 billion
• B)about $375 billion
• C)about $245 billion
• D)about $184 billion