Answer:
a. $32 billion
b. 30.77%
Explanation:
a. The absolute size of its public debt in year 4 is shown below:
= Budget deficit in year 2 - budget surplus in year 3 + budget deficit in year 4
= $40 billion - $10 billion + 2 billion
= $32 billion
b, And, public debt as a percentage of real GDP in year 4 is
= Public debt ÷ Real GDP in year 4
= $32 billion ÷ $104 billion
= 30.77%
We simply applied the above formula so that the both answers could come