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Consider the following statements.
1. Interest rate growth rate differential (IRGD) is a key indicator of an economy’s long-run debt sustainability.
2. When the cost of raising debt is higher than the gross domestic product (GDP) growth rate, then public debt comes with low fiscal costs.
Which of the above statements is/are incorrect?
  • a)
    1 only
  • b)
    2 only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
Consider the following statements.1. Interest rate growth rate differe...
A key indicator of an economy’s long-run debt sustainability is the differential between interest paid on government debt and the economy’s nominal growth rate. When the cost of raising debt is lower than the gross domestic product (GDP) growth rate, public debt comes with low fiscal costs. In such a situation, the debt-to-GDP ratio of the economy declines as debts are rolled over.
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Consider the following statements.1. Interest rate growth rate differential (IRGD) is a key indicator of an economy’s long-run debt sustainability.2. When the cost of raising debt is higher than the gross domestic product (GDP) growth rate, then public debt comes with low fiscal costs.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?
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Consider the following statements.1. Interest rate growth rate differential (IRGD) is a key indicator of an economy’s long-run debt sustainability.2. When the cost of raising debt is higher than the gross domestic product (GDP) growth rate, then public debt comes with low fiscal costs.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? for Current Affairs 2024 is part of Current Affairs preparation. The Question and answers have been prepared according to the Current Affairs exam syllabus. Information about Consider the following statements.1. Interest rate growth rate differential (IRGD) is a key indicator of an economy’s long-run debt sustainability.2. When the cost of raising debt is higher than the gross domestic product (GDP) growth rate, then public debt comes with low fiscal costs.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Current Affairs 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements.1. Interest rate growth rate differential (IRGD) is a key indicator of an economy’s long-run debt sustainability.2. When the cost of raising debt is higher than the gross domestic product (GDP) growth rate, then public debt comes with low fiscal costs.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?.
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