Question: Solve Clipboard E20 X V fx A B C D E F G H K M N Il. Suppose that the nominal federal budget deficit

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Clipboard E20 X V fx A B C D E F G H K M N Il. Suppose that the nominal federal budget deficit in the U.S. is about $1.9 trillion and outstanding debt is about $35 trillion (the approximate US numbers). 4 What is the real deficit if the inflation rate is: (i) 2%? (ii) 3%? 10 11 (iii) 4%? 12 13 Hint: Real deficit = nominal deficit - (amount of debt x inflation). See the ppt FP slides in Module 6. 14 15 (iv) What is your group's view of moderate inflation? High inflation? 16 17 18 19

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