The debt service ratio is defined as
A)the ratio of total debt to export earnings.
B)the ratio of total debt to GDP.
C)the ratio of payments on foreign debt to export earnings.
D)the ratio of payments on foreign debt to GDP.

Question

Quizplus · Accepted Answer

The debt service ratio is the ratio of payments on foreign debt to export earnings. It measures the ability of a country to pay off its external debt. The other options, such as total debt to export earnings or GDP, do not capture the payments on the debt and therefore do not provide an accurate measure of a country's ability to service its debt.

The Debt Service Ratio Is Defined as