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still make all interest payments? r

still make all interest payments? r

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A government finances all of its debt through 1-year treasury bonds. This government is able to collect $258 million in tax revenue and the country has a GDP of $816 million. If this government is able to consistently sell treasury bonds which yield 3.06% 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.
Transcribed Image Text:A government finances all of its debt through 1-year treasury bonds. This government is able to collect $258 million in tax revenue and the country has a GDP of $816 million. If this government is able to consistently sell treasury bonds which yield 3.06% 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.
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