Neco 2018 Economics Question 30

Practice objective / multiple choice question 30 from the 2018 Neco Economics examination.

Neco 2018 Economics Objective / Multiple Choice Medium Difficulty
Question 30 NECO • 2018 • ECONOMICS • objective

The country's nominal GDP is \(\text{₦}5{,}000\) billion and the public debt stands at \(\text{₦}1{,}200\) billion (debt‑to‑GDP ratio 24%). The average interest rate on the debt is 5% per annum and the economy's real GDP growth rate is expected to be 3% per annum. The primary budget balance is currently a deficit equal to 2% of GDP.\n\nWhat primary balance (as a percentage of GDP) is required to keep the debt‑to‑GDP ratio unchanged next year?

Answer Options

A. A primary deficit of 0.48% of GDP (i.e., the primary balance must be -0.48% of GDP).
B. A primary surplus of 0.24% of GDP (i.e., the primary balance must be +0.24% of GDP).
Correct Answer C. A primary surplus of 0.48% of GDP (i.e., the primary balance must be +0.48% of GDP).
D. A primary surplus of 0.60% of GDP (i.e., the primary balance must be +0.60% of GDP).
Correct Answer
C
Correct Option:
A primary surplus of 0.48% of GDP (i.e., the primary balance must be +0.48% of GDP).

About This Question

This is Neco 2018 Economics Question 30. It is one of the objective questions from the 2018 Neco Economics examination.

Difficulty level: Medium .

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