Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

The statements A, B, C, and D are all incorrect. The debt-to-GDP ratio can exceed 100 percent, as seen in countries with high levels of debt compared to their GDP. The debt-to-GDP ratio can change even if both GDP and national debt increase, depending on the rates at which they grow. An increase in the budget deficit does not necessarily lead to an increase in the debt-to-GDP ratio if GDP grows at a faster rate or other factors are at play. Similarly, the debt-to-GDP ratio will not always decrease when GDP is growing; it also depends on how the national debt is changing.

Which of the Following Statements Is TRUE