If annual GDP growth is .10,the interest rate is .05,there is no price inflation,and the government wants to keep national debt at 60% of GDP,then each year the government must run a
A) primary deficit equal to 3% of national income
B) primary deficit equal to 2% of national income
C) primary deficit equal to 1% of national income
D) primary surplus equal to 2% of national income
E) primary surplus equal to 3% of national income

Question

Quizplus · Accepted Answer

The government must run a primary deficit equal to 3% of national income to keep national debt at 60% of GDP.

If Annual GDP Growth Is