Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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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