Suppose the budget deficit is rising 6 percent per year and nominal GDP is rising 10 percent per year. Which of the following best describes the debt created by these deficits?

Question

Quizplus · Accepted Answer

If nominal GDP is rising faster than the budget deficit, the debt-to-GDP ratio is likely to decrease, making the debt sustainable. Additionally, saving can help offset any future burden.

Suppose the Budget Deficit Is Rising 6 Percent Per Year