If the government runs a primary deficit in year zero of B₀,and decides to repay it in year t (i.e.,bring the debt back down to its pre-existing level) ,then in year t it must run a primary surplus equal to
A) zero.
B) one.
C) B₀.
D) B₀(1 + r) .
E) none of the above
Correct Answer:
Verified
Q1: In the medium run,a tax increase that
Q2: The official measure of the deficit becomes
Q4: In the medium run,a tax cut that
Q5: The government budget constraint tells us that
Q6: The debt ratio will increase by more
Q7: When the economy is in a liquidity
Q8: The primary deficit is
A)government spending minus interest
Q9: In the short run,an increase in government
Q10: If the government runs a primary deficit
Q11: The official measure of the deficit
A)always underestimates
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