1. As shown in Table 13, the nominal public debt in 1946 was 268.1 billion dolla
ID: 1137826 • Letter: 1
Question
1. As shown in Table 13, the nominal public debt in 1946 was 268.1 billion dollars, whereas the nominal public debt in 2017 was 20,244.9 billion dollars. That is, the 2017 public debt was over 73 times larger than the 1946 public debt. Use the GDP deflator in Table 10 to convert both the 1946 and 2017 nominal public debt numbers into constant 1990 dollars. Then, calculate how many times larger the real 2017 public debt was than the 1946 real public debt. 2. As shown in Table 13, government (at all levels) spent a total of 6,362.1 billion dollars in 2017. This is more than 23 times the 260.7 billion government spent in 1968. Use the GDP deflator in Table 10 to calculate the 2017 level of government expenditures, given in 1968 dollars. Then, in real terms, calculate how many times larger the 2017 government expenditures level was than the 1968 government expenditures level. 3. Suppose you considered the purchase of a new car which cost $25,000 in 2017. Use the price index (i.e., the GPD deflator) in Table 10 to get an estimate of what a comparable car would have cost in the year of your birth. 90Explanation / Answer
Question 1
Nominal public debt in 1946 = $268.1 billion
GDP deflator in 1946 = 11.6
GDP deflator in 1990 = 64.8
Calculate the 1946 nominal debt in 1990 dollars -
1946 real public debt = Nominal debt in 1946 * (GDP deflator in 1990/GDP deflator in 1946)
1946 real public debt = $268.1 billion * (64.8/11.6)
1946 real public debt = $1,497.66 billion
Thus,
The 1946 nominal debt in 1990 dollars is $1,497.66 billion.
Nominal public debt in 2017 = $20,244.9 billion
GDP deflator in 2017 = 113.4
GDP deflator in 1990 = 64.8
Calculate the 2017 nominal debt in 1990 dollars -
2017 real public debt = Nominal debt in 2017 * (GDP deflator in 1990/GDP deflator in 2017)
2017 real public debt = $$20,244.9 billion * (64.8/113.4)
2017 real public debt = $11,568.51 billion
Thus,
The 2017 nominal debt in 1990 dollars is $11,568.51 billion.
Calculate the number of time the real 2017 public debt was larger than the real 1946 public debt -
Number of times = Real 2017 public debt/Real 1946 public debt
Number of times = $11,568.51 billion/$1,497.66 billion = 7.72 times or 8 times
Thus,
The real 2017 public debt was larger than the real 1946 public debt by over 8 times.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.