Increases in the debt-GDP ratio are primarily caused by
A)a high growth rate of GDP.
B)a high government deficit relative to GDP.
C)increases in government borrowing through bonds.
D)increases in interest rates.

Question

Quizplus · Accepted Answer

The debt-GDP ratio is a measure of a country's debt relative to its economic output (GDP). An increase in the ratio occurs when the government deficit (spending exceeding revenue) increases relative to GDP. This can occur due to increased government spending, tax cuts, or other fiscal policies that decrease revenue. Increases in government borrowing through bonds and increases in interest rates may also contribute to a higher debt-GDP ratio, but they are not the primary cause.

Increases in the Debt-GDP Ratio Are Primarily Caused by