A government begins the year with a debt of $50 billion, collects $10 billion in tax revenues and spends $4 billion. Debt at the end of the year is

Question

Quizplus · Accepted Answer

The government starts with a debt of $50 billion, collects $10 billion in taxes, and spends $4 billion. The net change in its cash position is $10 billion - $4 billion = $6 billion. This amount reduces the debt, so the end-of-year debt is $50 billion - $6 billion = $44 billion.

A Government Begins the Year with a Debt of $50