Answer the question using the following budget information for a hypothetical economy. Assumethat all budget surpluses are used to pay down the public debt.
Government
Spending
Tax
Revenues
GDP
Year 1 $450 $425 $2,000
Year 2 $500 $450 $3,000
Year 3 $600 $500 $4,000
Year 4 $640 $620 $5,000
Year 5 $680 $580 $4,800
Year 6 $600 $620 $5,000
Refer to the above data. If year 1 is the first year of this nation's existence and year 4 is the present year, the public debt as a percentage of GDP in year 4 is:.
a) 1.39 percent.
b) 7.5 percent.
c) 2.5 percent.
d) 3.9 percent.