Assume a country’s nominal GDP is $600 billion, government expenditures less debt service are $145 billion, and revenue is $160 billion. The nominal debt is $360 billion. Inflation is 3 percent and interest rates are 6 percent.
Instructions: Enter your responses rounded to decimal place. To indicate a deficit, be sure to use a negative (−) sign before the value.
a. Calculate debt service payments.
b. Calculate the nominal deficit or surplus.
c. Calculate the real deficit or surplus.