From the end of 2005 to the end of 2006, the United States ran a deficit of about $309 billion. The debt at the start of this period was about $4,592 billion. Which of the following combinations of inflation and real GDP growth would have allowed the government to run this deficit while keeping the ratio of real GDP to the debt about the same?

a. about 3% inflation and about 2.2% real GDP growth
b. about 3% inflation and about 3.2% real GDP growth
c. about 3.4% inflation and about 3.3% real GDP growth
d. about 3.4% inflation and about 4% real GDP growth


c

Economics

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