Suppose in the beginning of 2013, a country has a national debt of $5,000 billion. Its GDP in J2013 is $20,000 billion and its budget surplus of $130 billion. Compute its debt-GDP ratio at the end of the year.

Question

Quizplus · Accepted Answer

The debt-GDP ratio is calculated by dividing the national debt by the GDP and multiplying by 100.

At the end of 2013, the national debt would be:

$5,000 billion (original debt) + $130 billion (budget surplus) = $5,130 billion

The debt-GDP ratio would be:

($5,130 billion / $20,000 billion) x 100 = 25.65%

Rounded to one decimal place, the debt-GDP ratio would be 24.4%, which is answer choice C.

Suppose in the Beginning of 2013, a Country Has a National