Question 7: Suppose that the primary deficit (G-T) is zero in the economy. Suppose further that the interest rate (r) is positive but it is smaller than the GDP growth rate (n). The government currently has a positive amount of debt (B > 0). Which of the following statements regarding the government debt is (are) correct? I. The amount of debt (B) does not change over time II. The debt-to-GDP ratio (b = B/Y) will converge to zero in the long-run (a) None of the above (b) I only (c) II only (d) Both I and II

Question 7: Suppose that the primary deficit (G-T) is zero in the economy. Suppose further that the interest rate (r) is positive but it is smaller than the GDP growth rate (n). The government currently has a positive amount of debt (B > 0). Which of the following statements regarding the government debt is (are) correct? I. The amount of debt (B) does not change over time II. The debt-to-GDP ratio (b = B/Y) will converge to zero in the long-run (a) None of the above (b) I only (c) II only (d) Both I and II

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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