The real value of the debt (in 1995 dollars) in 1995 was $3.6 trillion and in 1980
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The real value of the debt (in 1995 dollars) in 1995 was $3.6 trillion and in 1980 was $1.3 trillion. Assume that 50 percent of this buildup in the debt would have gone into investment, so the capital stock would have been $1.15 trillion larger in 1995. Assume that the capital stock in 1995 was $15 trillion. By how much lower was GDP in 1995 as a result of the displaced investment, if an increase in the capital stock by 1 percent leads to a 0.2 percent increase in GDP?
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Economics Of The Public Sector
ISBN: 9780393925227
4th Edition
Authors: Joseph E. Stiglitz, Jay K. Rosengard
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