Suppose the budget deficit is rising 2 percent per year and nominal GDP is rising 7 percent per year.Which of the following best describes the debt created by these continuing deficits?
A) sustainable,but the future burden on your children cannot be offset
B) not sustainable,and the future burden on your children cannot be offset
C) not sustainable,but the future burden on your children can be offset if you save for them
D) sustainable,and the future burden on your children can be offset if you save for them

Question

Quizplus · Accepted Answer

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

Suppose the Budget Deficit Is Rising 2 Percent Per Year