Unlike households, governments are often able to sustain large debts. for example, in 2015, the u. s. government's total debt reached $18.1 trillion, approximately equal to 100.4% of gdp. at the time, according to the us treasury, the average interest rate paid by the government on its debt was 1.2%. however, running budget deficits becomes hand when very large debts are outstanding.
a. calculate the dollar cost of the annual interest on the government's total debt, assuming the interest rate and debt figures previously cited.
b. if the government operates on a balanced budget before interest payments are taken into account, at what rate must gdp grow for the debt-gdp ratio to remain unchanged?