Consider changes in the government's debt-to-GDP ratio (D/GDP). If the rate of interest on government debt is less than the growth rate of GDP, a primary budget surplus will always reduce the D/GDP ratio. Question 18 options: less than; surplus; always reduce the D/GDP ratio. less than; deficit; increase or decrease the D/GDP ratio. greater than; deficit; always increase the D/GDP ratio. equals; balance; not change the D/GDP ratio. All of the above.
Added by Virginia F.
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It is a measure of the government's debt relative to the size of the economy. A higher D/GDP ratio indicates that the government has a larger debt burden relative to its ability to generate income. Now, let's consider the impact of changes in the interest rate on Show more…
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