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Calculate the nominal deficit or surplus

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Question - Assume a country's nominal GDP is $850 billion, government expenditures less debt service are $100 billion, and revenue is $100 billion. The nominal debt is $100 billion. Inflation is 5 percent and interest rates are 4 percent.

Required -

a. Calculate debt service payments.

b. Calculate the nominal deficit or surplus. Add a negative sign before the value to indicate a deficit.

c. Calculate the real deficit or surplus, placing a negative sign in front of the value if it is a deficit.

Reference no: EM133055277

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