If the real deficit is $200 billion, the inflation rate is 5 percent, and the debt is $3 trillion, then the nominal deficit is:

Question

Quizplus · Accepted Answer

The nominal deficit is calculated by adding the real deficit to the inflationary effect on the debt. The inflationary effect is 5% of $3 trillion, which is $150 billion. Adding this to the real deficit of $200 billion gives a nominal deficit of $350 billion.

If the Real Deficit Is $200 Billion, the Inflation Rate