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Need some help with these questions, thanks 1. Carlos, Deborah, and Felix are the only voters in a small society and are considering whether to
Need some help with these questions, thanks
1.
Carlos, Deborah, and Felix are the only voters in a small society and are considering whether to publicly nance a project. Indicate in the following table what each individual\"; vote would be and whether the public project will be funded. Name Marginal Cost Marginal Benefit Vote Carlos $200 $199 v Deborah $200 $192 V Felix $200 $500 V Total $600 $891 V If this same project were taking place in the private sector, a rm V fund the project. In private markets, decisions to provide goods or services to the market are generally made if marginal benets V marginal costs. In comparison, the decisions to provide goods and services by governments are made through V . As a result, governments may approve projects whose costs V their benets. Suppose the federal government has no national debt and spends $200 billion, while raising only $50 billion in taxes. To finance the deficit, the U.S. Treasury must issue $ billion in government bonds. Next year, assume tax revenues remain at $50 billion, and government spending remains $200 billion plus the interest payment it makes on the government bonds issued to finance the deficit in the first year. If the government pays a 10% rate of interest, the debt-servicing interest payment that needs to be added to the government's $200 billion expenditure for goods and services in the second year is $ billion. Then the deficit in the second year is billion, the amount of new debt issued is $ billion, and the new national debt is $ billion.Evaluate the following statement. True or False: The most unlikely problem of the national debt is that the government will go bankrupt. 0 True, because the U.S. Treasury can roll over the debt by issuing new securities. 0 False, because 1when government securities mature, the U.S. Treasury will default on its obligations. 0 False, because the government decit is always growing. 0 True, because the government surplus is always growingStep by Step Solution
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