Book edition 19th

Author(s) Roger Miller

Pages 753 pages

ISBN 9780134478777

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Short Answer

Suppose that the Office of Management and Budget provides the estimates of federal budget receipts, federal budget spending, and GDP shown below, all expressed in billions of dollars. Calculate the implied estimates of the federal budget deficit as a percentage of GDP for each year.

The budget deficit in 2015 is $3.55$ percent of GDP.

The budget deficit in 2016 was $3.37$ percent of GDP.

The budget deficit in 2017 is $3.35$ percent of GDP.

The budget deficit in 2018 is $3.36$ percent of GDP.

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Step by Step Solution

TABLE OF CONTENTS :

TABLE OF CONTENTS

Step 1: Calculation year 2015.

In the year 2015,

$F e d e r a l b u d g e t r e c e i p t s = $ 3, 829.8$

$F e d e r a l b u d g e t s p e n d i n g = $ 4, 382.6$

$G D P = $ 15, 573.2$

Calculating the budget deficit:-

$B u d g e t D e f i c i t = F e d e r a l B u d g e t S p e n d i n g - F e d e r a l B u d g e t R e c e i p t$

$B u d g e t D e f i c i t = $ 4, 382.6 - $ 3, 829.8$

$B u d g e t D e f i c i t = $ 552.8$

Calculating the budget deficit as percentage of GDP:-

role="math" localid="1651583575267" $B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = \frac{B u d g e t d e f i c i t}{G D P} \times 100$

role="math" localid="1651584084850" $B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = \frac{$ 552.8}{$ 15, 573.2} \times 100$

$B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = 3.55 p e r c e n t$

Step 2: Calculation year 2016.

In the year 2016,

$F e d e r a l b u d g e t r e c e i p t s = $ 3, 892.4$

$F e d e r a l b u d g e t s p e n d i n g = $ 4, 441.6$

$G D P = $ 16, 316.0$

$B u d g e t D e f i c i t = F e d e r a l B u d g e t S p e n d i n g - F e d e r a l B u d g e t R e c e i p t$

$B u d g e t D e f i c i t = $ 4, 441.6 - $ 3, 892.4$

$B u d g e t D e f i c i t = $ 549.2$

Calculating the budget deficit as percentage of GDP:-

$B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = \frac{B u d g e t d e f i c i t}{G D P} \times 100$

$B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = \frac{$ 549.2}{$ 16, 316.0} \times 100$

role="math" localid="1651584228109" $B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = 3.37 p e r c e n t$

Step 3: Calculation year 2017.

In the year 2017,

$F e d e r a l B e d g e t r e c e i p t s = $ 3, 964.2$

role="math" $F e d e r a l B e d g e t S p e n d i n g = $ 4, 529.3$

$G D P = $ 16, 852.1$

$B u d g e t D e f i c i t = F e d e r a l B u d g e t S p e n d i n g - F e d e r a l B u d g e t R e c e i p t$

$B u d g e t D e f i c i t = $ 4, 529.3 - $ 3, 964.2$

$B u d g e t D e f i c i t = $ 565.1$

Calculating the budget deficit as percentage of GDP:-

$B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = \frac{B u d g e t d e f i c i t}{G D P} \times 100$

$B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = \frac{$ 565.1}{$ 16, 852.1} \times 100$

$B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = 3.35 p e r c e n t$

Step 4: Calculation year 2018.

In the year 2018,

$F e d e r a l B u d g e t r e c e i p t s = $ 4, 013.5$

$F e d e r a l B u d g e t S p e n d i n g = $ 4.600.1$

$G D P = $ 17, 454.4$

$B u d g e t D e f i c i t = F e d e r a l B u d g e t S p e n d i n g - F e d e r a l B u d g e t R e c e i p t$

$B u d g e t d e f i c i t = $ 4, 600.1 - $ 4, 013.5$ $B u d g e t d e f i c i t = $ 586.6$

Calculating the budget deficit as percentage of GDP:-

$B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = \frac{B u d g e t d e f i c i t}{G D P} \times 100$

$B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = \frac{$ 586.6}{$ 17, 454.4} \times 100$

$B u d g e t D e f i c i t a s p e r c e n t a g e o f G D P = 3.36 p e r c e n t$

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Economics Today

Answers without the blur.

Short Answer

Suppose that the Office of Management and Budget provides the estimates of federal budget receipts, federal budget spending, and GDP shown below, all expressed in billions of dollars. Calculate the implied estimates of the federal budget deficit as a percentage of GDP for each year.

Step by Step Solution

Step 1: Calculation year 2015.

Step 2: Calculation year 2016.

Step 3: Calculation year 2017.

Step 4: Calculation year 2018.

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