Suppose the government starts with a debt of $0. Then in year 1, there is a deficit of $100 billion, in year 2 there is a deficit of $60 billion, in year 3 there is a surplus of $40 billion, and in year 4 there is a deficit of $20 billion. What is government debt at the end of year 4?
A)$20 billion
B)$140 billion
C)$180 billion
D)somewhat greater than $220 billion, depending on the interest rate
E)somewhat greater than $140 billion, depending on the interest rate

Question

Quizplus · Accepted Answer

The government debt at the end of year 4 is $140 billion. This is calculated by adding the deficits and subtracting the surplus: $100 billion (year 1) + $60 billion (year 2) - $40 billion (year 3) + $20 billion (year 4) = $140 billion. Interest rates are not considered in this calculation.

Suppose the Government Starts with a Debt of $0