Question: The gap between spending and taxes, excluding interest on the debt, is known as the primary deficit. Suppose there is $100 million of outstanding public

The gap between spending and taxes, excluding interest on the debt, is known as the primary deficit. Suppose there is $100 million of outstanding public debt. Suppose the interest rate is 2 percent. Explain why any primary deficit will lead to the total stock of debt to continue to grow over time. If you wanted to stop the debt from growing, what primary surplus (the opposite of the primary deficit) would you need in this case?

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