S00, government transfers – 20% of output. Government income is 40% of output. Calculate the government debt burden (government debt to total output) at the end of the current year 2010 if the output equals $5 000.

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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Consider the government debt at the beginning of
the year 2010 equals $2 000, the annual interest
rate on the government debt – 8%. Government
expenditures over the current year 2010 equal $1
500, government transfers - 20% of output.
Government income is 40% of output.
Calculate the government debt burden
(government debt to total output) at the end of
the current year 2010 if the output equals $5 000.
Transcribed Image Text:Consider the government debt at the beginning of the year 2010 equals $2 000, the annual interest rate on the government debt – 8%. Government expenditures over the current year 2010 equal $1 500, government transfers - 20% of output. Government income is 40% of output. Calculate the government debt burden (government debt to total output) at the end of the current year 2010 if the output equals $5 000.
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