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Macroeconomics

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Calculating Government Debt and Deficits

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If the government collects \$100 million in tax revenues, buys \$80 million worth of goods and services, makes \$40 million in transfer payments, and pays \$20 million in interest on its debt, then the value of the government debt is:

A

$40 million

B

$20 million

C

Zero

D

Minus \$20 million (a surplus of \$20 million)

E

Cannot be determined with the given information