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Measuring Inflation - Balanced Budget

Guatemala government has an outstanding debt of $18.23 billion and its GDP is 30% higher than the debt. The nominal interest rate is 5%. The inflation rate is 2%.

a. What is the sustainable deficit ratio if the country is growing at 5%? How about when inflation goes to �2%?

b.What about if the country grows at 2%? How about when inflation goes to �7%?

c. Is Guatemala's debt sustainable if the government runs a balanced budget in both a and b.

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M926504

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