Which of the following, regarding debt and growth, is false? a. If there is no (nominal) GDP growth, the debt/GDP ratio can only be reduced through fiscal surplus. b. Furman and Summers argue that the debt/GDP ratio is a misleading measure of a country's debt burden in an era of low interest rates. c. The burden of a dollar borrowed by the government today decreases over time—relative to GDP—if the interest rate on government debt is larger than the nominal economic growth rate. d. Blanchard and Leigh found that, following the Great Recession, countries that enacted fiscal austerity had less economic growth than they expected, and vice- versa
Which of the following, regarding debt and growth, is false? a. If there is no (nominal) GDP growth, the debt/GDP ratio can only be reduced through fiscal surplus. b. Furman and Summers argue that the debt/GDP ratio is a misleading measure of a country's debt burden in an era of low interest rates. c. The burden of a dollar borrowed by the government today decreases over time—relative to GDP—if the interest rate on government debt is larger than the nominal economic growth rate. d. Blanchard and Leigh found that, following the Great Recession, countries that enacted fiscal austerity had less economic growth than they expected, and vice- versa
Chapter17: Federal Deficits, Surpluses, And The National Debt
Section: Chapter Questions
Problem 7SQP
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Question
Which of the following, regarding debt and growth, is false?
a. If there is no (nominal) GDP growth, the debt/GDP ratio can only be reduced
through fiscal surplus.
b. Furman and Summers argue that the debt/GDP ratio is a misleading measure of
a country's debt burden in an era of low interest rates.
c. The burden of a dollar borrowed by the government today decreases over
time—relative to GDP—if the interest rate on government debt is larger than the
nominal
d. Blanchard and Leigh found that, following the Great Recession, countries that
enacted fiscal austerity had less economic growth than they expected, and vice- versa
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