(a) What percentage of U.S. debt do foreigners hold? Instructions: Enter your re
ID: 1178214 • Letter: #
Question
(a) What percentage of U.S. debt do foreigners hold?
Instructions: Enter your response as a whole percentage.
= 31%
(b)
If the interest rate on U.S. Treasury debt is 4 percent, how much interest do foreigners collect each year from the U.S. Treasury? (Assume a total debt of $16 trillion.)
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What percentage of U.S. debt do foreigners hold? If the interest rate on U.S. Treasury debt is 4 percent, how much interest do foreigners collect each year from the U.S. Treasury? (Assume a total debt of $16 trillion.)Explanation / Answer
a.) 31% (See figure 12.4 on page 265)
b.)The question asks how much interest do foriegners collect each year from the U.S. Treasury. Assuming a total debt of $16 trillion, 31% of which is owned by foriegners, we can conclude that total debt owned by foriegners is $4.96 billion (16 x 0.31). Therefore, the total interest that foriegners collect is 4% of $4.96 billion, which of course, is $198.4 billion ( 4.96 x 0.04 ).
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