All else equal, a rise in the debt- to- GDP ratio implies:
A) a greater surplus is needed to prevent further rises in the debt- to- GDP ratio.
B) a greater difference between the official and correct measures of the deficit as a fraction of GDP.
C) a greater ratio of interest payments to GDP.
D) All of the above.
E) None of the above.

Question

Quizplus · Accepted Answer

A rise in the debt-to-GDP ratio implies all of the mentioned outcomes: a greater surplus is needed to stabilize the ratio, there's a greater difference between official and correct deficit measures relative to GDP, and the ratio of interest payments to GDP increases.

All Else Equal, a Rise in the Debt- To- GDP