How much interest will the government pay each year

Reference no: EM13224222

Suppose a government has no debt and a balanced budget. Suddenly it decides to spend 10 billion while raising only 8 billion worth of taxes.

1.) What will be the government deficit

2.) If the government finances the deficit by issuing bonds, what amout of bonds will it issue?

3.) At a 5 percent rate of interest, how much interest will the government pay each year?

Reference no: EM13224222

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