Suppose That a Country Has an Inflation Rate of About

question 113

Multiple Choice

Suppose that a country has an inflation rate of about 5 percent per year and a real GDP growth rate of about 2 percent per year.What is the highest deficit the government can afford without raising the debt-to-income ratio?

• A) about 2 percent of GDP
• B) about 7 percent of GDP
• C) about 9 percent of GDP
• D) about 12 percent of GDP

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Definitions:

Facial Bone

Any of the bones surrounding and forming the human face, including the mandible, maxilla, and nasal bones.

Ethmoid

A spongy bone located between the eyes and forming part of the nasal cavity and the orbits of the eyes.

Maxillary

Pertaining to the maxilla, the upper jaw bone that holds the upper teeth and plays a key role in forming the structure of the face.

Zygomatic

Pertaining to the zygomatic bone, which is one of the bones that forms the cheek and part of the eye socket.