Holding everything else constant,if the nominal interest rate decreases,the interest paid on the debt ________ the debt-to-GDP ratio,and nominal GDP growth ________ the debt-to-GDP ratio.

Question

Quizplus · Accepted Answer

A decrease in the nominal interest rate reduces the interest paid on the debt, which decreases the debt-to-GDP ratio. Additionally, if nominal GDP growth increases, it also decreases the debt-to-GDP ratio by increasing the denominator.

Holding Everything Else Constant,if the Nominal Interest Rate Decreases,the Interest