1 Consider the following data for Country A and Country B. 10 points Country A 2.8% Country B 1.5% 90% 60% Primary Budget Surplus / GDP Sovereign Debt / GDP Nominal GDP Growth Rate Nominal Interest Rate on Debt 2% 496 5% 7% In this scenario is likely to see fiscal stabilization How will monetary policy likely change in the country that will not see stabilization? The central bank will decrease interest rates No new government debt will be issued The central bank will keep interest rates stable, but increase the money supply Congress will decrease spending