Suppose the following statistics characterize the financial health of the hypothetical economy Debtenburg at the end of 2017: • Gross domestic product (GDP) is equal to $150 billion. The national debt is equal to $225 billion. The government has a budget deficit of $9 billion. The debt ceiling in Debtenburg is set at $246 billion. The following calculations help you see how the ratio of debt to GDP changes from one year to the next. Complete the first row of the following table by computing the ratio of national debt to GDP. Suppose that nominal GDP remains at $150 billion in 2018, and again the government runs a budget deficit of $9 billion. For simplicity, assume the interest rate on the national debt is 0%, and no payments are being made to reduce the debt. Calculate national debt and the debt-to-GDP ratio in 2018. Enter these values in the second row of the following table. Year 2017 2018 GDP National Debt (Billions of dollars) (Billions of dollars) Ratio of National Debt to GDP 150 225 150

Suppose the following statistics characterize the financial health of the hypothetical economy Debtenburg at the end of 2017: • Gross domestic product (GDP) is equal to $150 billion. The national debt is equal to $225 billion. The government has a budget deficit of $9 billion. The debt ceiling in Debtenburg is set at $246 billion. The following calculations help you see how the ratio of debt to GDP changes from one year to the next. Complete the first row of the following table by computing the ratio of national debt to GDP. Suppose that nominal GDP remains at $150 billion in 2018, and again the government runs a budget deficit of $9 billion. For simplicity, assume the interest rate on the national debt is 0%, and no payments are being made to reduce the debt. Calculate national debt and the debt-to-GDP ratio in 2018. Enter these values in the second row of the following table. Year 2017 2018 GDP National Debt (Billions of dollars) (Billions of dollars) Ratio of National Debt to GDP 150 225 150

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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