Public debt is the sum of deficits and surpluses (negative deficits) over time. Suppose that a country has no public debt in year 1 but experiences a budget deficit of $40 billion in year 1, a budget deficit of $20 billion in year 2, a budget surplus of $10 billion in year 3, and a budget deficit of $2 billion in year What is the absolute size of its public debt in year 4? 40+20+(-10)+240+20-10+252 billion2) If the real GDP in year 4 is $104 billion, what is this country’s public debt as a percentage of real GDP in year 4? If the real GDP in year 4 is $104 billion, what is this country’s public debt as a percentage of real GDP in year 4? Should fiscal policy be counter-cyclical?Please answer everything asked on question 2, thank you

Real GDP is the inflation-adjusted measure of the value of all goods and services produced in a…

Answered: Public debt is the sum of deficits and…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter17: Federal Deficits, Surpluses, And The National Debt

Section: Chapter Questions

Problem 19SQ

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Public debt is the sum of deficits and surpluses (negative deficits) over time. Suppose that a country has no public debt in year 1 but experiences a budget deficit of $40 billion in year 1, a budget deficit of $20 billion in year 2, a budget surplus of $10 billion in year 3, and a budget deficit of $2 billion in year What is the absolute size of its public debt in year 4?

40+20+(-10)+2

40+20-10+2

52 billion

2) If the real GDP in year 4 is $104 billion, what is this country’s public debt as a percentage of real GDP in year 4? If the real GDP in year 4 is $104 billion, what is this country’s public debt as a percentage of real GDP in year 4? Should fiscal policy be counter-cyclical?

Please answer everything asked on question 2, thank you

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