A government finances all of its debt through 1-year treasury bonds. This government is able to collect $175 million in tax revenue and the country has a GDP of $765 million. If this government is able to consistently sell treasury bonds which yield 3.29% interest, what is the maximum debt-to- GDP ratio this country could maintain and still make all interest payments? Put your answer in percentage form (e.g. 30.57 not 0.3057) and then round to two decimal places.

A government finances all of its debt through 1-year treasury bonds. This government is able to collect $175 million in tax revenue and the country has a GDP of $765 million. If this government is able to consistently sell treasury bonds which yield 3.29% interest, what is the maximum debt-to- GDP ratio this country could maintain and still make all interest payments? Put your answer in percentage form (e.g. 30.57 not 0.3057) and then round to two decimal places.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The government starts with a debt of $4 billion. In year one, the government runs a deficit of $600 million. In year two, the government runs a deficit of $1 billion. In year three, the government runs a surplus of $300 million. What is the total debt of the government at the end of year three? Show work.
Consider an economy in which people spend 90 percent of each additional dollar of income they earn. If the government does easy (expansionary) fiscal policy via changing taxes by $2000, what will be the total effect on Y? Carefully follow all numeric instructions. Use a positive number (no sign) to show an increase in Y and a negative number (with negative sign) to show a decrease.
In 2007, France's government had revenue of $1.287 trillion while expenditures totaled $1.356 trillion. GDP was $2.56 trillion. In 2007, the government budget balance was and government debt A) $1.27 trillion; increased B) $1.02 trillion; decreased C) -$0.69 billion; increased D) $0.69 billion; decreased
Consider the government debt at the beginning of the year 2010 equals $2 000, the annual interest rate on the government debt – 8%. Government expenditures over the current year 2010 equal $1 500, government transfers - 20% of output. Government income is 40% of output. Calculate the government debt burden (government debt to total output) at the end of the current year 2010 if the output equals $5 000.
Year Government Purchases Government Taxes Real GDP 1 400 247 5,812 2 434 203 5,898 Suppose there is no public debt before Year 1 and that net transfers are equal to zero. What is the public debt as a percentage of GDP in Year 2? Answer this as a percentage and round your answer to two digits after the decimal without the percentage sign. ex. If you found the rate to be 5.125%, answer 5.13.
Federal government expenditures and receipts for the simple economy of the nation of Topanga are listed in the table below. The government of Topanga would like to reduce the debt-to-GDP ratio, and the Finance Minister of Topanga has proposed the following: "The best way to reduce the debt-to-GOP ratio is to increase GDP, because with a larger GDP, the ratio will have to get smaller, 1 therefore propose that goverment expenditures be increased by 25 percent, personal income taxes be reduced by 25 percent, corporate income taxes be reduced by 25 percent, and contributions for social insurance be reduced by 25 percent. All of these moves will increase GDP by 10 percent by increasing consumer spending, business spending, and government spending by the exact amounts of the increased spending and reduced taxes. Debt GOP Goverment expenditures Goverment transfer payments Interest payment Personal income tax receipts Corporate income tax receipts Contributions for social insurance $20 million…
The government debt is None of these answers is correct. the total accumulation of deficits in the current period. the outstanding stock of bonds that have been issued in the past. equal to total tax receipts. the annual difference between government spending and tax revenues.
Suppose the media report that the federal deficit this year is $200 billion. The national debt was $5,000 billion last year, and it is $5,200 billion this year. The price level this year is 3 percent higher than it was last year. What is the real deficit?
A government starts off with a total debt of $2.0 billion. In year one, the government runs a deficit of $200 million. In year two, the government runs a deficit of $1 billion. In year three, the government runs a surplus of $800 million. What is the total debt of the government at the end of year three?
Lilliput is a country that has closed borders and does not import or export any goods or services; hence, they do not worry about trade with other countries. Total spending for the federal government of Lilliput for the last fiscal year was $1.06$1.06 billion. The country collected $1.05$1.05 billion in taxes during this same fiscal year. Assume government transfers were zero. Based on this information, what is Lilliput's budget balance? Enter your answer to two decimal places. budget balance: $ ______ billion In the last fiscal year, Lilliput was running a. a budget surplus b. a balanced budget c. a budget deficit
For each of the descriptions below, decide whether it applies to a deficit, a surplus or the public debt. Deficit Surplus Public Debt Is calculated using factors The amount by which annual including treasury bills, notes, government revenues exceed expenditure. and bonds. Experienced by the U.S. federal government between 1998-2001, but rarely occurs in the modern American economy. Occurs when the cost of additional government programs exceed additional government income. The amount that government spending exceeds tax revenue.
What does a declining national debt indicate? Group of answer choices The government is receiving more money in taxes than it spends in a year. The government is spending more money than it receives in taxes for a given year. The unemployment rate is declining. The rate of inflation is declining.