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I got these questions on a trial exam, but I sincerely have no idea how to solve it, can yuo maybe help? Assume that the
I got these questions on a trial exam, but I sincerely have no idea how to solve it, can yuo maybe help?
- Assume that the Dutch government faces an interest rate of 4% and a growth rate of 3% and has an initial debt-to-GDP ratio of 0.6. How large should the Dutch government's budget surplus be to keep the debt-to-GDP ratio constant?
- Assume that the government of Debtonia faces an interest rate of 10%, a growth rate of 2% and a primary deficit of 1%. If the initial debt-to-GDP ratio is 1, after one year the debt-to-GDP ratio will be:
Thanks in advance! :)
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