Suppose the budget deficit is rising 3 percent per year and nominal GDP is rising 5 percent per year. The debt created by these continuing deficits is

Question

Quizplus · Accepted Answer

If nominal GDP is growing at a faster rate than the budget deficit, the debt-to-GDP ratio can remain stable or even decrease, making the debt sustainable. Additionally, saving can help offset future burdens.

Suppose the Budget Deficit Is Rising 3 Percent Per Year