Suppose the federal government had budget deficits of $40 billion in year 1 and $50 billion in year 2 but had budget surpluses of $20 billion in year 3 and $50 billion in year 4.Also assume that it used its budget surpluses to pay down the public debt.At the end of these four years,the federal government's public debt would have:

Question

Quizplus · Accepted Answer

The total deficit over the first two years is $90 billion ($40 billion + $50 billion), and the total surplus over the next two years is $70 billion ($20 billion + $50 billion). Therefore, the net increase in public debt is $20 billion ($90 billion - $70 billion).

Suppose the Federal Government Had Budget Deficits of $40 Billion