To answer these questions, let's break down each scenario and explain how to calculate the new levels of gross national debt and debt held by the public.
1. What is the new level of gross national debt?
To calculate the new level of gross debt, you need to add the deficit to the initial debt. In this case, the initial gross national debt is $3 trillion, and the federal government runs a deficit of $300 billion. So, the new level of gross national debt can be calculated by summing the initial debt and the deficit:
New gross national debt = Initial gross national debt + Deficit
New gross national debt = $3 trillion + $300 billion
New gross national debt = $3.3 trillion
2. If 100 percent of the deficit is financed by the sales of securities to federal agencies, what happens to the amount of debt held by the public?
When the deficit is financed by the sales of securities to federal agencies, the debt held by the public remains unchanged. This is because the federal agencies are considered part of the public sector, so the debt they hold is simply transferring from one part of the public sector to another.
3. What happens to the level of gross debt?
The level of gross debt would increase by the amount of the deficit. In this case, if the deficit is $300 billion, the level of gross debt would increase by $300 billion.
4. If GDP increases by 5 percent at the same time that the deficit is run, what happens to gross debt as a percentage of GDP?
To calculate the gross debt as a percentage of GDP, divide the gross debt by the GDP and multiply by 100. If the GDP increases by 5 percent, we need to calculate the new gross debt as a percentage of the new GDP.
Gross debt as a percentage of GDP = (New gross national debt / New GDP) * 100
5. What happens to the level of debt held by the public as a percentage of GDP?
Similar to the previous question, to calculate the debt held by the public as a percentage of GDP, divide the debt held by the public by the GDP and multiply by 100. Since the debt held by the public remains unchanged when the deficit is financed by federal agencies, the percentage would remain the same as well.
Debt held by the public as a percentage of GDP = (Debt held by the public / GDP) * 100
To get precise calculations, you would need to know the values for GDP and the initial debt, but the explanations provided above guide you on how to calculate the new levels and percentages based on the given information.