QUESTION 13 Answor the question using the folowing budget information for a hypo

Question

QUESTION 13 Answor the question using the folowing budget information for a hypothotical economy Assume theat all udget surpluses are used to pay down the publio debt Government SpendingTax Revenues GDP Year 1 $450 Year 2500 Year 3600 Year 4 Year 5680 Year 6600 $425$2,000 3,000 4,000 5,000 4,800 5,000 450 500 620 580 620 640 Refer to the above data if year 1 is the first year of this nation's existence and year 4 lis the present year, the public debr as a percentage of GDP in year 4 is: O 7.5 percent. 1.39 percent 2.5 percent. 3.9 percent. QUESTION 14 Answer the question using the following budget information for a hypothatical economy. Assume thas al budget surpluses are used to pay down the publie debt Government Spending Tax Revenues GDP Year 1 $450 Year 2500 Year 3600 Year 4 Year 5 680 Year el 600 $425 $2,000 3,000 4,000 5,000 4,800 5,000 450 500 620 Refer to the above data. A budget surplus occurned in year 1 points QUESTION 15

Explanation / Answer

13) Public debt (year 4) = (450 - 425) + (500 - 450) + (600 - 500) + (640 - 620) = $195

Public debt/GDP = 195/5000 = 3.9% (Option 4)

14) Budget surplus occurs when Tax revenues > Government spending

Budget surplus occured in year 6

(Option 4 is correct)

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