Suppose That a Country Has an Inflation Rate of About

question 163

Multiple Choice

Suppose that a country has an inflation rate of about 2 percent per year and a real GDP growth rate of about 3 percent per year. Then the government can have a deficit of about

• A)6 percent of GDP without raising the debt-to-income ratio.
• B)5 percent of GDP without raising the debt-to-income ratio.
• C)1.5 percent of GDP without raising the debt-to-income ratio.
• D)1 percent of GDP without raising the debt-to-income ratio.

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