Suppose an economist is analyzing the impact of a debt and its ability to be paid. That economist will focus on

Question

Quizplus · Accepted Answer

The economist would need to focus on both the ratio of the debt to GDP and the interest payments as a percentage of GDP. This is because simply looking at the debt alone would not give a full picture of the ability to pay it back. The inflation-adjusted amount of debt would also not be sufficient since it does not provide information on the current state of the economy. By analyzing the ratio of debt to GDP, the economist can see how much debt the country has relative to its ability to produce goods and services. Additionally, by examining the interest payments as a percentage of GDP, the economist can determine how much of the country's resources are being devoted to paying off the interest on the debt. This information is crucial in determining the sustainability of the debt and its impact on the economy.

Suppose an Economist Is Analyzing the Impact of a Debt