hard · Frm Part 2 Current Issues
A developing economy has a debt-to-GDP ratio of b = 60% and is facing a real interest rate on its debt of r = 7%. The real GDP growth rate is g = 3%.
What primary balance (as a % of GDP) is required to stabilize the debt-to-GDP ratio?
- 4.2% Surplus
- 6.0% Surplus
- 2.4% Surplus
- 2.4% Deficit
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