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Need help to compute bellow. Question 2 A heavily indebted government may end up in a vicious circle, where higher interest rates and lower growth

Need help to compute bellow.

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Question 2 A heavily indebted government may end up in a vicious circle, where higher interest rates and lower growth exacerbate the debt burden. a. Derive an expression for how the change in the government debttoGDP ratio depends upon the priJnary decit {relative to GDP), the earlier debttoGDP ratio, the interest rate and the GDP growth rate. b. By how much will the government debt ratio increase in a year if the outstanding debt is 100 per cent of GDP, the primary decit 10 per cent of GDP, the interest rate 2 per cent and the GDP growth rate 1 per cent? What primary scal balance is required to stabilise debt? c. Consider a country similar to Greece in 2013. Assume that the existing debt is 160 per cent of GDP, the primary decit 3 per cent of GDP.J the interest rate 10 per cent and the GDP growth rate 4 per cent. Compute the annual growth in the debtratio in this economy. What primary scal balance is required to stabilise debt

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