Your country consistently grows 3% in real terms. Inflation (of GDP deflator) remains steady at 1%....

 

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Your country consistently grows 3% in real terms. Inflation (of GDP deflator) remains steady at 1%. Interest rates are at 0%, but the primary budget deficit is at 3% of GDP. If these conditions hold for many years, what will public debt converge to? 128,6 % of GDP Debt will never converge to anything. It will just keep growing 72,1% of GDP Debt will never converge to anything. It will just keep falling until my country owns the entire world Your country consistently grows 3% in real terms. Inflation (of GDP deflator) remains steady at 1%. Interest rates are at 0%, but the primary budget deficit is at 3% of GDP. If these conditions hold for many years, what will public debt converge to? 128,6 % of GDP Debt will never converge to anything. It will just keep growing 72,1% of GDP Debt will never converge to anything. It will just keep falling until my country owns the entire world

Answer rating: 100% (QA)

Based on the given conditions the primary budget deficit is at 3 of GDP while the countrys real GDP ... View the full answer