Fill in the blank:  Consider the following information for Brittinia GDP:

Suppose the country budget deficit is 10% of the GDP and the nominal GDP Growth rate is 10% of GDP.  Now in the long run, Briittinia national debt as percentage of the country GDP will be …………..% .   Now suppose that in 2013, the country national debt is $4000 and nominal GDP is $24000, so a debt as a percentage of GDP is ………%.  Assume that every year the deficit as a percentage of GDP (f) is 10% and the nominal GDP growth rate (g) is also 5%.   Then in year 2013 the deficit is $............and in year 2014 debt is $………………. and GDP in 2014 is $..........., so debt as a percentage of GDP (b) is ……………%.  Each year debt as a percentage of GDP (b) would rise until it eventually gets very close to but never exceeds ………….%, so we say that in the long run it becomes …………..%. In addition, suppose that the interest rate (r) paid to bondholders is 10%, then I year 2013 the debt interest payment will be $…………and $...........in year 2014. So interest as a percentage of Brittinia GDP will be ……..%in year 2013  and ………… % in year 2014.

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2 Public Debt The public debt is the amount of money that a government ... View the full answer