11.3 Practice Problem 2 (algo) During a certain fiscal year, federal spending excluding public debt charges is $300 billion. and federal tax revenues are $320 billion. a. If the interest rate is 6% and public debt at the start of the year is $600 billion then the federal government's budget deficit is $ billion. If the interest rate is still 6% but public debt at the start of the year is $700 billion then the budget deficit is $ billion. Therefore budget deficits and the size ofthe public debt are directly 0 related. b. If the interest rate is 5% and public debt at the start of the year is $600 billion then the federal government's budget deficit is $ billion. If public debt at the start of the year is still $600 billion but the interest rate is 6% then the budget deficit is $ billion. Therefore budget deficits and the interest rate are directly 0 related