Answer the Question Using the Following Budget Information for a Hypothetical

question 108

Multiple Choice

Answer the question using the following budget information for a hypothetical economy.Assume that all budget surpluses are used to pay down the public debt. $\begin{array}{c}\begin{array}{lll}\\\\\text {Year 1}\\\text {Year 2}\\\text {Year 3}\\\text {Year 4}\\\text {Year 5}\\\text {Year 6}\end{array}\begin{array}{c}\text {Government}\\\underline{\text {Spending}}\\ \$ 450 \\500\\600\\640\\680\\600\end{array}\begin{array}{c}\\\underline{\text {Tax Revenues}}\\\$ 425 \\450 \\500 \\620 \\580 \\620\end{array}\begin{array}{c}\\\underline{\text { GDP }} \\ \$ 2,000 \\3,000 \\4,000 \\5,000 \\4,800 \\5,000\end{array}\end{array}$
Refer to the data.If year 1 is the first year of this nation's existence and year 4 is the present year,the public debt as a percentage of GDP in year 4 is:

• A) 7.5 percent.
• B) 1.39 percent.
• C) 2.5 percent.
• D) 3.9 percent.

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Definitions:

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