In this scenario (Country A /Country B) 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.

\begin{tabular}{|l|c|c|} \hline & Country A & Country B \\ \hline Primary Budget Surplus / GDP & 2.9% & 2.2% \\ \hline Sovereign Debt / GDP & 140% & 90% \\ \hline Nominal GDP Growth Rate & 5% & 4% \\ \hline Nominal Interest Rate on Debt & 7% & 6% \\ \hline \end{tabular} \begin{tabular}{|l|c|c|} \hline & Country A & Country B \\ \hline Primary Budget Surplus / GDP & 2.9% & 2.2% \\ \hline Sovereign Debt / GDP & 140% & 90% \\ \hline Nominal GDP Growth Rate & 5% & 4% \\ \hline Nominal Interest Rate on Debt & 7% & 6% \\ \hline \end{tabular}