Suppose that a country has an inflation rate of about 2 percent per year and a real GDP growth rate of about 3 percent per year.Then the government can have a deficit of about
A) 6 percent of GDP without raising the debt-to-income ratio.
B) 5 percent of GDP without raising the debt-to-income ratio.
C) 1 percent of GDP without raising the debt-to-income ratio.
D) None of the above is correct.
Correct Answer:
Verified
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