Economic

Question 1 (0.5 points) ~ Saved Suppose that GDP is $20 trillion and government debt is also $20 trillion. What percent of GDP is government debt? Your Answer 100 Answer Hide hint for Question 1 Don't overthink this one. Question 2 (0.5 points) This question is a continuation of the previous one. For simplicity we will assume that there is no inflation, and so no difference between nominal and real values. Suppose that in the current year the government borrows the money to pay the interest on its existing debt ($20 trillion) at an interest rate of 2%, but otherwise only spends as much as it takes in in taxes (that is, T . G). What is the new level of debt after this happens? Answer in trillions of dollars. Your Answer: Answer Hide hint for Question 2 The money borrowed to pay the interest adds to the debt. Your answer should be between 20 and 21. Include one number after the decimal point. Question 3 (1 point) This question is also a continuation of the previous two. Suppose that GDP also grows by 3% this year. Considering the new values of the debt and of GDP, the debt to GDP ratio has _compared to what it was initially. O al increased Obj decreased O'd) not changed