Suppose that a country has no public debt in year 1 but experiences a budget deficit of $40 billion in year 2, a budget deficit of $20 billion in year 3, a budget surplus of $10 billion in year 3, and a budget deficit of $2 billion in year 4.

What is the absolute size of its public debt in year 4? If its real GDP in year 4 is $104 billion, what is this country’s public debt as a percentage of real GDP in year 4? LO4