Answer to Question #192091 in Macroeconomics for Narendra

Question

Consider a country with a rate of growth (g) of 0.25%, an interest rate of 2.7%, a debt-to-income ratio (B/Y) of 94% and a primary deficit of 1.3% of GDP. The debt-to-GDP ratio will increase by ___________ .

Answer 1

Consider a country with a rate of growth (g) of 0.25%, an interest rate of 2.7%, a debt-to-income ratio (B/Y) of 94%, and a primary deficit of 1.3% of GDP. The debt-to-GDP ratio will increase by 1.3%-0.25%=1.275%.