Chapter 30, Problem 3CYU

a)

To determine

The impact of real GDP growth rate increases on public debt and government liabilities.

Explanation of Solution

If the GDP rate has increased, there will undoubtedly be a decrease in public debt.

b)

To determine

The impact of retirees living longer on public debt and government liabilities.

Explanation of Solution

Greater life duration for pensioners will result in greater payouts, which will increase the implicit commitments.

c)

To determine

The impact of tax revenue decreases on public debt and government liabilities.

Explanation of Solution

If we do not make some major adjustments to our expenditure, the public debt will rise as a result of the decline in tax collections.

d)

To determine

The impact of government borrowing on public debt and government liabilities.

Explanation of Solution

In this instance, government borrowing and interest payments are the cause of the rise in implicit obligations.