Consider a government with an outstanding stock of public debt.If,in any given year,the government has a primary budget surplus and the real interest rate on government bonds is less than the growth rate of real GDP,then

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If the government has a primary budget surplus, it means that it is able to cover its current expenses without relying on borrowing. If the real interest rate on government bonds is less than the growth rate of real GDP, it means that the economy is growing faster than the interest rate on the government's debt, making it easier for the government to pay that debt off over time. As a result, the debt-to-GDP ratio will fall, as the economy is growing faster than the outstanding debt.

Consider a Government with an Outstanding Stock of Public Debt