Question

Suppose that a country has no public debt in year 1 but experiences a budget deficit of $50 billion in year 2, a budget deficit of $30 billion in year 3, a budget surplus of $20 billion in year 4, and a budget deficit of $2 billion in year 5.
1) What is the absolute size of its public debt in year 5? $___________ billion
Instructions: Enter a value for the surplus or deficit as a whole number. Do not include a plus or minus sign.
2) If its real GDP in year 5 is $104 billion, what is this country

Answer 1

Answer:

The answers are:

1. $62 billion
2. WHAT IS THE QUESTION?

Explanation:

The absolute size of the public debt is calculated by adding all the deficits from years 2, 3 and 5 and subtracting the surplus of year 4:

total public debt = $50 billion + $30 billion + $2 billion - $20 billion  

total public debt = $62 billion