The government begins year 1 with $25 billion of debt. Based on the information in the above table, what is the amount of debt following year 3?
A) $15 billion
B) $5 billion
C) $20 billion
D) $260 billion

Question

Quizplus · Accepted Answer

The government begins year 1 with $25 billion of debt. In year 1, the government runs a deficit of $10 billion, so the debt increases to $35 billion. In year 2, the government runs a surplus of $5 billion, so the debt decreases to $30 billion. In year 3, the government runs a deficit of $15 billion, so the debt increases to $45 billion.

The Government Begins Year 1 with $25 Billion of Debt