Budget Deficit Question?
How do you calculate the real values of the deficit and the ratios of the deficit and the debt to GDP when you are given a table that tells you nominal deficit, nominal debt, GDP deflator, and nominal gdp?
I'm really confused!!
Answer:
To get real value of deficit use the GDP deflator.
The to get ratios of the deficit and the debt to GDP use the ratio of nominal values
math note:
(ax)/(ay)=x/y so it doesn't mater whether or not you convert to real before taking the ratio
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I'm really confused!!
Answer:
To get real value of deficit use the GDP deflator.
The to get ratios of the deficit and the debt to GDP use the ratio of nominal values
math note:
(ax)/(ay)=x/y so it doesn't mater whether or not you convert to real before taking the ratio
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