If the nominal deficit is $300 billion, inflation is 10 percent, and total debt is $2 trillion, then the real deficit is equal to:

Question

Quizplus · Accepted Answer

The real deficit is calculated by adjusting the nominal deficit for inflation. The formula to adjust for inflation is: Real Deficit = Nominal Deficit - (Inflation Rate * Total Debt). Here, the Nominal Deficit = $300 billion, Inflation Rate = 10% or 0.1, and Total Debt = $2 trillion or $2000 billion. Plugging these into the formula gives: Real Deficit = $300 billion - (0.1 * $2000 billion) = $300 billion - $200 billion = $100 billion.

If the Nominal Deficit Is $300 Billion, Inflation Is 10