Find the Largest Nominal Deficit That the Government Can Run

question 59

Essay

Find the largest nominal deficit that the government can run without raising the debt-GDP ratio,under each of the following sets of assumptions:
(a)Suppose that real GDP is 20,000 and remains constant,nominal GDP is initially 30,000,inflation is 4%,and the debt-GDP ratio is 1.2.
(b)Suppose that nominal GDP growth is 5% and outstanding nominal debt is 1500.

---

Definitions:

Hotel Chains

Groups of hotels operated by the same company or owner, often sharing a brand, marketing, and standardized amenities.

Innovative Projects

Initiatives that introduce new ideas, methods, or products.

Counterproductive Projects

Projects or initiatives that have the opposite of the intended effect, often causing more harm than good.