What is the primary deficit ratio to gdp

Reference no: EM13900753

Consider an economy characterized by the following facts:

i. The official budget deficit is 4% of GDP.
ii. The debt-to-GDP ratio is 100%.
iii. The nominal interest rate is 10%.
iv. The inflation rate is 7%.

a. What is the primary deficit/surplus ratio to GDP?

b. What is the inflation-adjusted deficit/surplus ratio to GDP?

c. Suppose that output is 2% below its natural level. What is the cyclically adjusted, inflation-adjusted deficit/surplus ratio to GDP?

d. Suppose instead that output begins at its natural level and that output growth remains constant at the normal rate of 2%. How will the debt-to-GDP ratio change over time?

Reference no: EM13900753

Questions Cloud

What happens to the domestic real interest rate : Suppose that domestic inflation remains the same. What happens to the domestic real interest rate? What is likely to happen to the growth rate?

Knowledge and understanding of constructivism : Expand your knowledge and understanding of constructivism and its theoretical components, you will research and write about one of the prominent constructivists listed below based on the first letter of your last name.

What environmental law currently up for debate : What environmental law, currently up for debate before a state or federal government, do you support and why?

Compare functionalist and conflict theoretical approaches : Compare and contrast the functionalist, conflict, and interactionist theoretical approaches to the study of society. How does each approach view society, the individual, social order, and social change? Your textbook analyzes sports in terms of va..

What is the primary deficit ratio to gdp : Suppose instead that output begins at its natural level and that output growth remains constant at the normal rate of 2%. How will the debt-to-GDP ratio change over time?

What is the equilibrium price and quantity? : What is the equilibrium price and quantity?

Del gato clinic deposits all cash receipts on the day : Outstanding checks as of June 30 total $ 1,829.

What is the payoff for the republicans : If the Republicans decide not to cut military spending, what is the best response of the Democrats? Given this re- sponse, what is the payoff for the Republicans?

Prepare a multiple-step income statement for year ended july : Prepare a multiple-step income statement for the year ended July 31, 2006, concluding with earnings per share. In computing earnings per share.

User Account

All Pages