Functions Defined by Data Part 4

Functions Defined by Data

Part 4: The Federal Debt

If you spend more money than you make, you eventually go into debt, i.e., you will have to borrow money from some source in order to pay your bills. This is also true of the Federal government, which, because of the annual deficits in recent decades, has accumulated an enormous debt.

If you go into debt, the institution that lends you money charges interest, computed as a percentage of the amount of money you currently owe on your loan. Interest is a fee paid to the lender on a regular schedule, such as monthly or yearly. The Federal government is no different: it must pay interest on the huge Federal debt.

The total Federal debt as of January 1, 1980 was about 900 billion dollars. Use the data on the budget deficits during the 1980's and early 90's to estimate the total Federal debt at the start of 1993.

What was the percentage increase in the debt over this 13-year period (i.e., the amount of debt added during this 13-year period divided by the total debt at the start of the period)?

If interest paid on the debt in 1993 averaged 8%, about how much money had to be allocated in the 1993 Federal budget just for interest payments on the debt that existed as of January 1,1993?

Given a U. S. population of approximately 250 million people, how much interest was paid per capita in 1993? If the Federal debt interest payment in 1993 were distributed evenly over every man, woman, and child in the United States, how much interest would each person have paid?