Question

A government collects $700 billion annually in tax revenue. Each year it allocates $130 billion to interest payments that it must pay on its accumulated debt. What percentage of annual tax revenue is allocated to make these interest payments?

a) 28.75%
b) 27.58%
c) 18.57%
d) 17.15%

Answer 1

18.57% of the annual tax revenue is allocated for interest payments on the accumulated government debt, making option c) the correct answer.

Step-by-step explanation:

To calculate the percentage of annual tax revenue that is allocated to make interest payments on accumulated debt, we use the following formula:

Percentage of the Revenue for Interest Payments = (Interest Payments / Total Tax Revenue) × 100

Plugging in the values given, we can get:

Percentage of Revenue for Interest Payments = ($130 billion / $700 billion) × 100 = 18.57%

Therefore, the correct option is c) 18.57% of the annual tax revenue is allocated to make these interest payments.