A government finances all of its debt through 1-year treasury bonds. This government is able to collect $102 million in tax revenue and the country has a GDP of $742 million. If this government is able to consistently sell treasury bonds which yield 2.52% 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 $102 million in tax revenue and the country has a GDP of $742 million. If this government is able to consistently sell treasury bonds which yield 2.52% 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.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter30: Government Budgets And Fiscal Policy
Section: Chapter Questions
Problem 51P: A government starts off with a total debt of $3.5 billion. In year one, the government runs a...
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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 $102 million in tax revenue and the country has a GDP of $742 million. If this government is
able to consistently sell treasury bonds which yield 2.52% 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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