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Fiscal Sustainability
DDT Questions
Mixed bag
Others
100

Let us assume that your country faces the situation of the real cost of debt (r) being higher than real GDP growth (g): r>g. In such a situation, what will happen with the debt ratio?

  • It will increase in any case.
  • It will increase if and only if there is a primary deficit.
  • It will decrease in any case.
  • It will remain constant or decrease in case of a sufficiently large primary surplus. 
  • It will remain constant or decrease in case of a sufficiently large primary surplus. 
100

Recall the DDT “Input-Data” worksheet: which of the following variables used to populate the template does not require projections?

  • The total gross public debt-to-GDP ratio.
  • The primary balance-to-GDP ratio.
  • The foreign inflation rate.
  • Stock of uncalled guarantees, as a share of GDP.
  • The total gross public debt-to-GDP ratio.
100

Which of the following statements is NOT true? 

  • Human activities have fundamentally increased the concentration of greenhouse gases in Earth’s atmosphere.
  • Apart from carbon dioxide (CO₂) other greenhouse gases contribute to global warming.
  • We are well on track to reach the Paris Agreement long-term temperature goal.
  • Global temperatures are on average over 1°C above pre-industrial levels

We are well on track to reach the Paris Agreement long-term temperature goal

100

Which of the following statements regarding the likely implications of adaptation investment is NOT true?

  • Lower reconstruction needs resulting from the accumulation of resilient infrastructure which depreciates at a lower rate
  • Lower post-disaster damage and output loss
  • Crucial to mitigate natural disaster damage and disruption
  • Coefficient for automatic debt dynamics would remain below unity and the primary deficit would persist.


  • Coefficient for automatic debt dynamics would remain below unity and the primary deficit would persist.
200

A country’s initial public debt/GDP ratio is 60 percent. Assume that its annual real interest rate equals 6 percent; real GDP growth rate equals 5.0 percent; and the primary fiscal balance equals – 4.0 percent of GDP. What would happen to the ratio of public debt to GDP over time? 

  • It will increase without bound
  • It will remain stable at 60 percent of GDP
  • It will stabilize at some value higher than 60 percent of GDP
  • It will eventually converge to zero
  • It will increase without bound
200
  • What is the value of  (coefficient of stock-flow adjustment term in t) if there is no exchange rate appreciation/depreciation in period t, and the share of foreign currency denominated debt is 50 percent
  • μ_t= (1-α_t (1-e_t^avg/e_t^eop))^(-1)>0
  • It is equal to 0
  • It is equal to -1
  • It is equal to 1
  • It is equal to ½
  • It is equal to 1
200

In the event of a shrinking working-age population (and hence fewer contributors), what reform could work to balance cash flows in a defined benefit (typically pay-as-you-go) pension system?  

a.         Increase the replacement rate.

b.         Decrease the contribution rate.

c.         Introduce an indexation of pensions to wages.

d.         Raise retirement age.

            Raise retirement age.

200
  • Looking at the fan chart below, which of the following is true? 

positive shocks to the baseline are likely to prevail negative ones

downside and upside risks around the baseline are symmetric

the probability that the debt-to-GDP ratio will be below 130% by 2027 is over 75%

the probability that the debt-to-GDP ratio will remain below 128% by 2027 is around 50%

 

 

the probability that the debt-to-GDP ratio will remain below 128% by 2027 is around 50%

300

What do “other net debt creating flows” (OF) capture in the debt dynamics equation?

  • They adjust for intra-year exchange rate fluctuations, among others.
  • They capture the use or buildup of liquid assets, among others.
  • They capture the interest bill that is paid on existing debt, among others.
  • They represent the residual, among others.
  • They capture the use or buildup of liquid assets, among others.
300
  • Which country has never participated in the FIFA World cup?
  • Algeria
  • Iran
  • Jordan
  • Saudi Arabia
  • Jordan
300

Which city is further north?

  • Rome
  • New York
  • Tokyo
  • Madrid
  • Rome
400

A country’s initial public debt/GDP ratio is 60 percent. Assume that its annual real interest rate equals 6 percent; real GDP growth rate equals 5.0 percent; and the primary fiscal balance equals – 4.0 percent of GDP. What is the ratio of public debt to GDP in period t? (Round your answer) 

  • 55%
  • 61%
  • 65%
  • 60%
  • 65%
400
  • Consider the following decomposition of factors affecting debt dynamics in a particular country. Focusing on the cumulative change in debt, indicate which statement correctly describes the assumptions underlying the projections.


  • The primary balance remained in deficit in historical data
  • The primary balance is projected to be in deficit
  • Exchange rate depreciation has a significant contribution in the projection
  • With the exception of 2013, growth is projected to be positive

  • With the exception of 2013, growth is projected to be positive
400

High and increasing inflation is likely to have the following effect on debt (Assume everything else remains constant – ceteris paribus): 

  • Debt/GDP will decrease in the long run as higher supply driven inflation leads to higher real growth
  • Debt/GDP will increase in the long run due to tighter financing conditions
  • Debt/GDP will increase in the long run due to the “dilution” effect
  • Debt/GDP will increase in the short run as expectations adjust to actual inflation
  • Debt/GDP will increase in the long run due to tighter financing conditions
500

Where is the world’s largest desert?

  • Asia
  • Africa
  • Latin America
  • Australia
  • Antarctica
  • Antarctica
500
  • For the fan chart below, what is the probability of the debt-to-GDP ratio remaining above 40 percent of GDP in period d( t+3)?
  •  


  • 10%
  • 25%
  • 75%
  • 90%
  •  
  • 75%
500

For which of the following groups of countries is it true that all of them are projected to have in 2023 a general government gross debt-to-GDP ratio of above 50%?

  • UAE, Algeria, Iraq
  • Mauritania, Oman, Egypt
  • Bahrain, Morocco, Jordan
  • Qatar, Kuwait, Tunisia
  • Bahrain, Morocco, Jordan