Suppose in the beginning of 2013, a country has a national debt of $5,000 billion. Its GDP in 2013 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 the country's national debt divided by its GDP, expressed as a percentage.

At the beginning of 2013, the national debt was $5,000 billion.

During the year, the country had a budget surplus of $130 billion. This means that the government collected $130 billion more in revenue than it spent.

Therefore, at the end of 2013, the national debt would be:

$5,000 billion - $130 billion = $4,870 billion

To calculate the debt-GDP ratio, we divide the national debt by the GDP, and then multiply by 100 to get a percentage:

($4,870 billion / $20,000 billion) x 100% = 24.4%

Therefore, the correct answer is C) 24.4%.

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