How does the presence of government debt affect the government’s ability to conduct such counter-cyclical fiscal policy? Perhaps the easiest way to answer this question is to recall the equation that describes the change in the debt-to-GDP ratio: This equation shows that the size of the change in the debt-to-GDP ratio depends on the level of the debt-to-GDP ratio. For example, if the real interest rate exceeds the growth rate of real GDP, so thatrg is positive, then the increase in the debt-to-GDP ratio (Ad) will be higher if d is already high than if it is low (for any given value of x).