Expressing the U.S. federal budget deficit as a percentage of Gross Domestic Product (GDP)
A) results in inflation-adjusted revenue and expenditure numbers.
B) helps us understand the size of the deficit relative to the size of the economy.
C) was useful through the 1980s, but is no longer helpful because both the deficit and real Gross Domestic Product (GDP) have grown so large.
D) is only useful if the budget deficit is rising at an annual rate of more than 4 percent.

Question

Quizplus · Accepted Answer

Expressing the budget deficit as a percentage of GDP helps us understand the size of the deficit relative to the size of the economy. This can be useful in assessing the impact of the deficit on the overall economy.