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Sati [7]
1 year ago
11

At the end of 2018, the federal government debt of the U.S. stood at 104% of GDP. Imagine that, unlike in previous years, from 2

019 on the federal government runs a balanced primary budget, i.e. total primary federal government expenses are equal to total federal government revenues. Also suppose that in all years starting from 2019, the nominal GDP will grow at 3% and the interest rate at which the U.S. government can borrow will be 2%. What will be the U.S. federal debt as a fraction of GDP in year 2050
Business
1 answer:
Naddik [55]1 year ago
8 0

Answer:

The U.S. federal debt as a fraction of GDP in year 2050 will be 77%

Explanation:

According to the given data we have the following:

Debt in the end of 2018 = 104% of GDP

Nominal GDP growth = 3%

Interest on debt = 2%

In order to calculate What will be the U.S. federal debt as a fraction of GDP in year 2050 first we have to calculate the debt in 2050 using the following formula:

Debt in 2050 = Current Debt*(1+r%)n

Debt in 2050 = 104*1.0232 = 196

Next, we would have to calculate the GDP in 2050 using the following formula:

GDP in 2050 = Current GDP*(1+r%)n

GDP in 2050 = 100*1.0332 = 257.5

Therefore, Debt as percentage of GDP in 2050 = 196/ 257 = 77%

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Suppose that you inherited some 2.25% US Treasury bonds from your grandfather that mature in 2027. Although they were originally
zubka84 [21]

Answer:

we will sell bond and invest for better investments

Explanation:

we know here that Yield on Treasury Bond of Grandfather =  2.25%

so we believe interest rate will be continue for rise

Bond are valued = $950

so we  the Bond and invest the proceed for better interest rate

and

we know  Grandfather bond price will be decrease if rate increase as that we predict

because we know  Bonds prices and the interest rate is inversely proportional to the each other

so as that  if interest rate increases Bonds prices will be decrease

and the Vice Versa

so that we will sell bond and invest for better investments

because here if once the interest rate increase then he will selling point regarding for Bond and price will be fall

8 0
1 year ago
Chris was the business manager for a real estate firm earning an annual salary of $40,000. Then Chris decided to become a consul
Reptile [31]

Answer:

The answer is: $40,000

Explanation:

Chris's opportunity cost of working as a consultant instead of working as a business manager (her old job) is $40,000. So in order for Chris to earn normal profit, the difference between his revenue and his combined explicit (e.g. rent, assistant's salary) and implicit costs (opportunity cost) is zero.

7 0
1 year ago
Prescott Bank offers you a five-year loan for $75,000 at an annual interest rate of 6.8 percent. What will your annual loan paym
notsponge [240]

Answer:

Y= $18,194.05

Explanation:

This is a form of annuity that involves payment of equal amounts monthly for 5 years. These amount are made up of part of the interest and part of the principal.

Using the annuity formula

P= Y{1-(1/[1+r]^n)/r}

Where P = Initial loan amount

Y = yearly payment

r= interest rate

n= number of years

75,000= Y{1-(1/[1+0.068]^5)/0.068}

75,000= Y{1-(0.719689)/0.068}= Y{0.280311/0.068}

Y= 75,000/4.122227

Y= $18,194.05

7 0
2 years ago
A system of values and beliefs in an organization that reinforces the idea that providing the customer with quality service is t
Paraphin [41]

Answer:

Service culture

Explanation:

Service culture can simply be defined to be an organizational culture in which employees collectively think or work towards providing quality service whhich is the main aim of the business.

Cheers

8 0
2 years ago
On January 23, Marco Company sold inventory costing $23,000 to customers on account for a price of $44,000. Which ONE of the fol
ohaa [14]

Answer:

e. DEBIT to Accounts Receivable $44,000

Explanation:

The accrual journal entry to record the sale involves a debit to the accounts receivable account and a credit to sales revenue;  

 

Income 44000

Costing 23000

 

e. DEBIT to Accounts Receivable $44,000  

7 0
2 years ago
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