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

Question

Quizplus · Accepted Answer

The Answer of 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

If the Government Runs a Primary Deficit in Year Zero