The United States is a net borrower. If its budget deficits rise faster than GDP, the national debt will:
A)increase in terms of dollars but decrease as a percentage of GDP.
B)increase both in terms of dollars and as a percentage of GDP.
C)decrease in terms of dollars but increase as a percentage of GDP.
D)decrease both in terms of dollars and as a percentage of GDP.

Question

Quizplus · Accepted Answer

If the United States' budget deficits rise faster than its GDP, the national debt will increase both in terms of dollars and as a percentage of GDP. This is because the absolute amount of debt is growing while the economy (GDP) is not growing as quickly to offset the relative increase in debt.

The United States Is a Net Borrower