debt increases and GDP decreases.
GDP Ratio
If for example your country has high public debt-GDP ratio. What steps would you recommend to lower public debt to manageable level?
From such an action (increase in government spending by 5 billion and a Marginal Propensity to Consume of 90%), the GDP would increase (in the scope of simplicity) by 4.5 billion. This is because government expenditures is counted in GDP, and in this case 90% of it is consumed by the populace, so 5B * .9 = 45B. But, being that the GDP is Consumption + Gross Investment + Govt. Spending +(-) Imports/exports, one could suggest that the GDP would increase by just 5B because that which is not consumed is saved (and thus invested).
Any increase or decrease inÊa persons income is included on the GDP. The rent on a two-bedroom apartment is an increase in income and would be included.
debt increases and GDP decreases.
The debt can be repaid, or the GDP can grow faster than the debt.
(primary balance/GDP)*100 .GDP decreases. Debt increases.
30%
GDP Ratio
$80 trillion
800 billion dollars
none
80 trillion
It measures that amount that the country actually produces as a whole compared to the debt that the nation owes.
False
false