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Consider the dynamics of government debt studies in the lecture on multi-period dynamic fiscal policy. Which of the following is true? Question 9 options: With
Consider the dynamics of government debt studies in the lecture on multi-period dynamic fiscal policy. Which of the following is true? Question 9 options: With a primary balance of zero and positive outstanding debt, because of interest payments, the government must always run a surplus to have the debt to GDP ratio unchanged. Under certain conditions, the government can permanently run deficits and still maintain sustainable debt dynamics. By changing the nominal interest rate, monetary policy can always guarantee debt sustainability. The divergence of net and gross debt in Canada can be explained by changes in the value of fixed capital, such as the value of toll highways
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