Suppose that primary budget balance always equals zero. What is the level of public debt at the end of year 3? The real interest rate r=0.05 and the initial stock of debt equals 100.
Time | Dt |
0 | 100 |
1 |
|
2 |
|
3 | ? |
Which of the following is most likely to lead to a decrease in inflationary expectations?
Question 9