The table below shows government purchases (G),net tax revenues (T),and debt-service payments (iD)over a 4-year period for a hypothetical economy.All figures are in billions of dollars.Assume the stock of debt at the end of 2012 is $500 billion.
TABLE 31-1
-Refer to Table 31.1.What is the stock of debt at the end of 2013?

Question

The table below shows government purchases (G),net tax revenues (T),and debt-service payments (iD)over a 4-year period for a hypothetical economy.All figures are in billions of dollars.Assume the stock of debt at the end of 2012 is $500 billion.
  TABLE 31-1
-Refer to Table 31.1.What is the stock of debt at the end of 2013?

Quizplus · Accepted Answer

The stock of debt at the end of 2013 can be calculated as follows:

Debt at the end of 2012 = $500 billion
Deficit in 2013 = G - T - iD = $100 billion - $80 billion - $20 billion = $0 billion
Therefore, the debt at the end of 2013 would be the same as the debt at the end of 2012, which is $500 billion.

Therefore, the correct choice is (D) $506 billion.

The Table Below Shows Government Purchases (G),net Tax Revenues (T),and