Suppose that the country of Aquilonia has an inflation rate of about 2 percent per year and a real growth rate of about 3 percent per year. Suppose also that it has nominal GDP of about 400 billion units of currency and current nominal national debt of 200 billion units of domestic currency. Which of the following government spending and taxation figures will keep the debt to-income ratio
constant?
a. government spending equal to 30 billion units and tax collections equal to 25 billion units
b. government spending equal to 30 billion units and tax collections equal to 20 billion units
c. government spending equal to 30 billion units and tax collections equal to 10 billion units
d. government spending equal to 30 billion units and tax collections equal to 5 billion units
b
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When the policy rate hits its lower bound and inflation keeps falling, this portion of the Monetary Policy curve is
A) downward sloping. B) upward sloping. C) flat. D) undetermined.
Which of the following involves payment of part of the face value or principal prior to maturity?
A) fixed-payment loan B) coupon bond C) discount bond D) simple loan
_____ determine the efficient pattern of specialization in production
a. Total costs b. Opportunity costs c. Marginal costs d. Sunk costs
A competitive price-taker firm would be willing to remain in the industry in the long run at zero economic profit because
a. it would find it too difficult to exit from the industry in the long run. b. accounting profit would be negative. c. it is covering all costs, including the opportunity cost of capital and labor. d. its sunk costs would prevent it from leaving the industry.