The debt- to- GDP ratio is higher:
A) the higher the ratio of the primary surplus to GDP.
B) the lower the real interest rate.
C) the higher the real interest rate.
D) the higher the growth rate of output.
E) the lower the ratio of the primary deficit to GDP.

Question

Quizplus · Accepted Answer

A higher real interest rate means that interest payments on the debt are higher, which increases the debt-to-GDP ratio.

The Debt- To- GDP Ratio Is Higher