college-economics

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The gross national debt initially is equal to $3 trillion and the federal government then runs a deficit of $300 billion: total 5 questions. Confused, believe gross debt = all fed govt debt

What is the new level of gross national debt?

If 100 percent of the deficit is financed by the sales of securities to federal agencies, what happens to the amount of debt held by the public?
What happens to the level of gross debt?

If GDP increases by 5 percent in the same that the deficit is run, What happens to gross debt as a percentage of GDP? What happens to the level of debt held by the public as a percentage of GDP?

  • college-economics -

    1) 3.3 Trillion, obviously
    2) Securities are debt held by someone else, e.g., the public. So, debt held by the public rises by $300B. 3) No change to the overall level of gross debt.
    4) Debt as a percent of GDP is simply debt divided by GDP. So, if the denominator, goes up, the whole term goes down. 5) same logic.

  • college-economics -

    HELP!!!
    A. What is the new level of gross national debt?
    B. if 100%of the deficit is financed by the sale of secruties to federal agencies, what happens to the amount of debt held by the public? What happens to the level of gross debt?
    C. If GDP increases by 5% in the same year that the deficit is run, what happens to gross debt as a % of GDP? What happens to the level of debt held by the public as a % of GDP?
    Then, suppose that the gross natioanl debt initially is equal to $2.5 trillion and the federal government then runs a deficit of $100 billion:
    A. What is the new level of gross national debt?
    B. If 100% of this deficit is financed by the sale of secrutites to the public, what happends to the level of debt held by the public? What happends to the level of gross debt?
    C. If GDP increase by 6% in the same year as the deficit is run, what happens to gross debt as a % of GDP? What happends to the level of debt held by the public as a % of GDP?

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