Neco Model Questions Vol1 2017 Economics Question 38
Practice objective / multiple choice question 38 from the 2017 Neco Model Questions Vol1 Economics examination.
Country X has a public‑debt‑to‑GDP ratio of \(60\%\). The real interest rate on the debt is \(5\%\) per year and real GDP grows at \(3\%\) per year. The primary budget balance (primary deficit) is \(2\%\) of GDP.\n\n(a) Will the debt‑to‑GDP ratio rise or fall this year? Show the calculation.\n(b) What primary surplus (as a percent of GDP) would be required to keep the debt‑to‑GDP ratio unchanged?
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About This Question
This is Neco Model Questions Vol1 2017 Economics Question 38. It is one of the objective questions from the 2017 Neco Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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