An economy has $20 billion in debt at the beginning of the year. Tax revenues, net of transfers, are $5 billion while government spending is $15 billion. At the end of the year the debt is

Question

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The economy's debt increases by the difference between government spending ($15 billion) and tax revenues ($5 billion), which is $10 billion. Adding this to the initial debt of $20 billion results in a total debt of $30 billion at the end of the year.

An Economy Has $20 Billion in Debt at the Beginning