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6 (10 pts) Because of automatic stabilizers, various components of the government's budget depend on the level of output, Y. The following are the main
6 (10 pts) Because of automatic stabilizers, various components of the government's budget depend on the level of output, Y. The following are the main components of that budget: Tax revenues (in millions) =750 million + 0.15Y Transfers (in millions) = 2,000 million - 0.08Y Government purchases = 4,360 million Interest payments = 200 million Full-employment output = 20,000 million 6.1 (4 pts) Find the overall government budget deficit (surplus), the primary deficit, and the fullemployment budget deficit (surplus) for Y= 18,000 million. 6.2 (4 pts) Assume the total government debt equal to $13,500 million and Nominal GDP is growing at an annual rate of 5.7%. Find the change in the debt to GDP ratio of the country and the new debt to GDP ratio. 6.3 (2 pts) Find the largest overall budget deficit that the government can run without raising the debt to GDP ratio
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