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Sati [7]
3 years ago
11

At the end of 2018, the federal government debt of the U.S. stood at 104% of GDP. Imagine that, unlike in previous years, from 2

019 on the federal government runs a balanced primary budget, i.e. total primary federal government expenses are equal to total federal government revenues. Also suppose that in all years starting from 2019, the nominal GDP will grow at 3% and the interest rate at which the U.S. government can borrow will be 2%. What will be the U.S. federal debt as a fraction of GDP in year 2050
Business
1 answer:
Naddik [55]3 years ago
8 0

Answer:

The U.S. federal debt as a fraction of GDP in year 2050 will be 77%

Explanation:

According to the given data we have the following:

Debt in the end of 2018 = 104% of GDP

Nominal GDP growth = 3%

Interest on debt = 2%

In order to calculate What will be the U.S. federal debt as a fraction of GDP in year 2050 first we have to calculate the debt in 2050 using the following formula:

Debt in 2050 = Current Debt*(1+r%)n

Debt in 2050 = 104*1.0232 = 196

Next, we would have to calculate the GDP in 2050 using the following formula:

GDP in 2050 = Current GDP*(1+r%)n

GDP in 2050 = 100*1.0332 = 257.5

Therefore, Debt as percentage of GDP in 2050 = 196/ 257 = 77%

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According to the given question, we are asked to show the period which <em>Keynes argued</em> that the government should not balance its budget but instead have budget DEFICITS.

As a result, we can see that Keynes, one of the fathers of economics stated that it was <em>important</em> for the government to have budget deficits so that they could adequately navigate through the economic recessions at that periiod.

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3 years ago
Atlas Corporation sells 100 bicycles during a month. The contribution margin per bicycle is $200. The monthly fixed expenses are
jonny [76]

Answer:

A, $12,000

Explanation:

Profit is the financial gain as a result of the difference between the selling price of a product and the cost/production cost of the product.

To calculate the profit from the sale of the bicycles, we use the formula

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Cheers.

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