Answered: The government begins year 1 with $25…

The government begins year 1 with $25 billion of debt. Based on the information in the above table, what is the amount of debt following year 5?

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter16: Budget Deficits In The Short And Long Run

Section: Chapter Questions

Problem 1DQ

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Question

Year
1
2
3
4
5
Government
tax revenues
(billions of
dollars)
240
250
260
300
325
The government begins year 1 with $25 billion of debt. Based on the information in
the above table, what is the amount of debt following year 5?
1) $20 billion (net saving rather than debt.)
2) $35 billion
Government
expenditures
(billions of
dollars)
240
245
255
320
340
3) $50 billion
O4) $325 billion

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