With inflation of 5 percent,real GDP growth of 3 percent,and an outstanding national debt of $3400 billion,the "allowable deficit" that holds the debt-GDP ratio constant is

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Quizplus · Accepted Answer

The "allowable deficit" that keeps the debt-GDP ratio constant in the face of inflation and real GDP growth can be calculated by adding the inflation rate to the real GDP growth rate (5% + 3% = 8%), and then applying this total percentage growth to the outstanding national debt of $3400 billion. Thus, 8% of $3400 billion is $272 billion.

With Inflation of 5 Percent,real GDP Growth of 3 Percent,and