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Suppose a country has no public debt in year 1 but experiences a budget deficit of $40 billion in year 2, a budget deficit of $30 billion in year 3, a budget surplus of $10 billion in year 4, and a budget deficit of $2 billion in year 5. a. What is the absolute size of its public debt in year 5? b. If its real GDP in year 5 is $104 billion, what is this country's public debt as a percentage of real GDP in year 5?

Suppose a country has no public debt in year 1 but experiences a budget deficit of $40 billion in year 2, a budget deficit of $30 billion in year 3, a budget surplus of $10 billion in year 4, and a budget deficit of $2 billion in year 5. a. What is the absolute size of its public debt in year 5? b. If its real GDP in year 5 is $104 billion, what is this country's public debt as a percentage of real GDP in year 5?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Suppose a country has no public debt in year 1 but experiences a budget deficit of $40 billion in year 2, a budget deficit of $30 billion in year 3, a budget surplus of $10 billion in year 4, and a budget deficit of $2 billion in year 5. a. What is the absolute size of its public debt in year 5? b. If its real GDP in year 5 is $104 billion, what is this country's public debt as a percentage of real GDP in year 5?
Transcribed Image Text:Suppose a country has no public debt in year 1 but experiences a budget deficit of $40 billion in year 2, a budget deficit of $30 billion in year 3, a budget surplus of $10 billion in year 4, and a budget deficit of $2 billion in year 5. a. What is the absolute size of its public debt in year 5? b. If its real GDP in year 5 is $104 billion, what is this country's public debt as a percentage of real GDP in year 5?
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