Consider Changes in the Government's Debt-To-GDP Ratio

question 71

Multiple Choice

Consider changes in the government's debt-to-GDP ratio.Suppose that over a one year period the government has a primary budget surplus,and the real interest rate on government bonds is higher than the growth rate of real GDP.What is the effect on the debt-to-GDP ratio?

• A)it will rise
• B)it will fall
• C)uncertain - it is necessary to know the relative size of the different effects
• D)it will remain stable - the two effects cancel each other out

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Definitions:

Automatic Learning

The unconscious assimilation of knowledge or skills through exposure and practice without explicit effort.

Unconditioned Stimulus

A stimulus that naturally triggers a response without the need for prior learning.

Unconditioned Response

An instinctive response to a stimulus that happens automatically, without the need for prior learning or conditioning.

Reflexes

are involuntary and nearly instantaneous movements in response to stimuli, which demonstrate the functioning of the nervous system.