The official measure of the deficit A) always underestimates ...

[RYAN BANYAN]

The official measure of the deficit
 
  A) always underestimates the correct measure of the deficit when inflation is positive.
  B) differs from the correct measure by the inflation rate times taxes.
  C) depends on the nominal interest rate.
  D) depends on the real interest rate.
  E) none of the above

Question 2

The official measure of the deficit (the one reported by the government)
 
  A) tells us the change in government nominal debt.
  B) is equal to nominal interest payments on the debt plus the primary deficit.
  C) overestimates the real budget deficit whenever the inflation rate is positive.
  D) all of the above
  E) none of the above

[lkanara2]

Answer to Question 1

C

Answer to Question 2

D