Unlike households, governments are often able to sustain large debts. For example, in 2019, the U.S. government’s total debt reached $21.2 trillion, approximately equal to 105.3% of GDP. At the time, according to the U.S. Treasury, the average interest rate paid by the government on its debt was 1.3%. However, running budget deficits becomes hard when very large debts are outstanding. A) Calculate the total increase in national debt if the government incurs a deficit of $600 billion in 2020. Enter your answer in billions of dollars and round to the nearest tenth. - Debt Increase: $ (Billion) B) At what rate would GDP have to grow in order for the debt–GDP ratio to remain unchanged when the deficit in 2020 is $600 billion? Enter your answer as a percentage and round your answer to the nearest hundredth of a percent. - Rate of GDP Growth: (%)
Unlike households, governments are often able to sustain large debts. For example, in 2019, the U.S. government’s total debt reached $21.2 trillion, approximately equal to 105.3% of
A) Calculate the total increase in national debt if the government incurs a deficit of $600 billion in 2020. Enter your answer in billions of dollars and round to the nearest tenth.
- Debt Increase: $ (Billion)
B) At what rate would GDP have to grow in order for the debt–GDP ratio to remain unchanged when the deficit in 2020 is $600 billion? Enter your answer as a percentage and round your answer to the nearest hundredth of a percent.
- Rate of GDP Growth: (%)
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