Question

Calculate the real deficit or surplus in the following cases: a. Inflation is 17 percent. Debt is $7 trillion. Nominal deficit is $820 billion.

Answer 1

$370 Billion Surplus

Step-by-step explanation:

We can find the real deficit by using the following formula:

Real Surplus / (Deficit) = Nominal Deficit – (Inflation * Total Debt)

Here,

Nominal Deficit is $820 Billions

Inflation is 17%

And

Total Debt is $7 Trillion

By putting values, we have:

Real Deficit = $820 Billions - (17% * $7,000 Billions)

= $370 Billion Surplus