Homework Help: Macroeconomics

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

The following calculations help you see how the ratio of debt to GDP changes from one year to the next. Suppose that in a hypothetical country with a currency called the ducat, debt is equal to 140 trillion ducats and GDP is equal to 100 trillion ducats. This means that the ratio of debt to GDP is 1.4, or 140%. Also, suppose that the deficit is 7 trillion ducats, which is 7% of GDP.

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 - economyst, Tuesday, April 15, 2008 at 9:48am
do you have a question?

Answer this Question

Related Questions

macroeconomics - 23. The next four questions refer to the following price and ...
Macroeconomics - suppose that this year's money supply is $500b, nominal gdp...
Macroeconomics - If GDP increases by 5 percent in the same that the deficit is ...
Macroeconomics - Suppose that velocity is constant. The economy's output of...
Macroeconomics - How do you calculate the nominal GDP and the real GDP of ...
macroeconomics - Year - 2000 Nominal GDP: 9,817 Real GDP: ___________ GDP ...
macroeconomics - 27. The following data show nominal GDP and the appropriate ...
College Econ - The gross national debt initially is equal to $2.5 trillion and ...
macroeconomics - suppose that congress enacts a significant tax cut with the ...
Economics - Assume that the gross national debt initially is equal to $3 ...

For Further Reading

First Name:
School Subject:
Answer: