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QUESTION
Consider the government debt at the beginning of the year 2010 equals $2 000, the annual interest rate on the government debt - 8%.
Consider the government debt at the beginning of the year 2010 equals $2 000, the annual interest rate on the government debt - 8%. Government expenditures over the current year 2010 equal $1 500, government transfers - 20% of output. Government income is 40% of output.
Calculate the government debt burden (government debt to total output) at the end of the current year 2010 if the output equals $5 000.
