Calculate the real deficit or surplus in the following cases: a. Inflation is 10 percent. Debt is $3 trillion. Nominal deficit is $220 billion.

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Calculate the real deficit or surplus in the following cases:

a. Inflation is 10 percent. Debt is $3 trillion. Nominal deficit is $220 billion.

b. Inflation is 2 percent. Debt is $1 trillion. Nominal deficit is $50 billion.

c. Inflation is –4 percent. (Price levels are falling.) Debt is $500 billion. Nominal deficit is $30 billion.

d. Inflation is 3 percent. Debt is $2 trillion. Nominal surplus is $100 billion.

(A) $80 billion surplus

(B) $30 billion deficit

(C) $50 billion deficit

(D) $160 billion surplus

Explanation:

(A) The inflation is 10%

= 10/100

= 0.1

Nominal deficit is $220 billion

Debt is $3 trillion

Therefore the real deficit can be calculated as follows

= Nominal deficit-(inflation × debt)

= $220 billion-(0.1×$3 trillion)

= $220 billion-$300 billion

= -$80 billion

= $80 billion surplus

(B) The inflation rate is 2%

= 2/100

= 0.02

The nominal deficit is $50 billion

The debt is $1 trillion

Therefore the real deficit can be calculated as follows

= $50 billion-(0.02×$1 trillion)

= $50 billion - $20 billion

= $30 billion deficit

(C) The inflation rate is 4%

= 4/100

= 0.04

The nominal deficit is $30 billion

The debt is $500 billion

Therefore the real deficit can be calculated as follows

= $30 billion-(-0.04×$500 billion)

=$30 billion-(-$20 billion)

= $30 billion + $20 billion

= $50 billion deficit

(D) The inflation rate is 3%

=3/100

= 0.03

The nominal deficit is $100 billion surplus

The debt is $2 trillion

Therefore the real deficit can be calculated as follows

= $100 billion + (0.03×$2 trillion)

= $100 billion + $60 billion

= $160 billion surplus

the answer is: guns or butter

hope i

-lavira : )