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September 23, 2014

September 23, 2014

Posted by **Jenny** on Monday, April 14, 2008 at 11:24pm.

When the government runs a deficit, it spends more than it collects in tax revenue. To make up the difference, it borrows. So if it runs a deficit of 7 trillion ducats, debt increases by 7 trillion ducats. So debt next year is 147 trillion ducats. Suppose that there is no growth in real GDP and inflation is equal to -2% per year. (Negative inflation is the same as deflation.) Measured in ducats, what will GDP be equal to next year?

---What formula do i use to solve this?

V=GDP/m?

- Macroeconomics -
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