At the End of 2007,the Government Had a Debt of About

question 29

Multiple Choice

At the end of 2007,the government had a debt of about $5,000 billion.During 2007,real GDP grew by about 0.8 percent and inflation was about 2.7 percent.About what is the largest deficit the government could have run without raising the debt-to-GDP ratio?

• A)135 billion
• B)143 billion
• C)169 billion
• D)175 billion

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Definitions:

Mutually Beneficial

A term describing agreements or situations that provide advantages or gains to all parties involved.

Production Possibilities

outlines the different combinations of goods and services that an economy can produce, given its available resources and technology.

Autos

Short for automobiles, referring to motor vehicles designed for transporting passengers on roads.

Comparative Advantage

The ability of an individual or group to produce a good or service at a lower opportunity cost than others, leading to more efficient trade possibilities.