Suppose the national debt is $80 trillion and the government spends $800 billion during the fiscal year on goods and services. In addition, the government collects tax revenues of $600 billion and makes transfer payment equal to $300 billion. Assume the economy is producing at the potential or full employment output level. The budget balance for this economy is equal to __billion and the national debt is $. trillion.

Question

Suppose the national debt is $80 trillion and the government spends $800 billion during the fiscal year on goods and services. In addition, the government collects tax revenues of $600 billion and makes transfer payment equal to $300 billion. Assume the economy is producing at the potential or full employment output level. The budget balance for this economy is equal to __billion and the national debt is $. trillion.

The budget balance is equal to (600-800-300=-500) but I can't figure out to get the national debt $?

Answer 1

To calculate the national debt, you need to consider the budget balance and the previous national debt. The budget balance measures the difference between government revenues (taxes) and government expenditures (spending).

In this case, the budget balance is -$500 billion (or -$500 billion). This means that the government is running a budget deficit because its expenditures exceed its revenues. To find the new national debt, you need to add the budget deficit (-$500 billion) to the previous national debt.

However, the initial national debt amount is missing from the information provided. If the initial national debt is not given, it is unable to determine the exact national debt value.