S00, government transfers – 20% of output. Government income is 40% of output. Calculate the government debt burden (government debt to total output) at the end of the current year 2010 if the output equals $5 000.

3. Budget balances and the national debt The following table lists federal expenditures, revenues, and GDP for the U.S. economy during several years. All numbers are in billions of dollars. Revenues Year (Billions of dollars) 1929 3.9 1948 1967 1986 2005 FEDERAL EXPENDITURES AND RE VENUES (Percent of GDP) 25 20 15 10 41.6 Plot the data for revenues and expenditures as a percentage of GDP on the following graph, rounded to the nearest percent. Use the orange points (square symbol) for expenditures and the green points (triangle symbol) for revenues. Line segments will automatically connect the points. 1929 148.8 769.2 2,153.9 Expenditures GDP (Billions of dollars) (Billions of dollars) 3.1 103.6 1948 29.8 157.5 990.4 2,472.2 1987 YEAR 1986 269.2 2005 832.6 4,462.8 12,421.9 Expenditures Δ Revenues ?

The question is based on the following information: Item R million 510 540 490 534 Total government revenue Total government expenditure Current government revenue Current government expenditure Non-interest expenditure Cyclically adjusted revenue Cyclically adjusted expenditure The current budget balance is R million. If the balance is negative indicate it using the minus sign in your answer for instance-32 Answer: 500 480 500

There is $10 trillion in the loanable funds market.  $6 trillion in private borrowing and $4 trillion in government borrowing.  The federal government increases its borrowing to $5 trillion, crowding out $1 trillion in private borrowing.  Interest rates remain the same.  Make an argument that the GDP remains the same and that we don’t care about the crowding out.