Question

23. (1 pt) In 2015 the public debt was $18.2 trillion. Put this number in perspective by relating the debt to GDP, to other countries' debt, to the amount of interest payments on the debt, and to ownership of the debt. In 2015 debt was about dramatically starting in 2008 because of massive annual budget deficits percent of GDP and the percentage (rose, fell) 24. (1pt.) Can the large public debt cause the nation to go bankrupt? Explain. The large Federal debt ( can, cannot ) cause the country to go bankrupt. For one debt relative to the nation's earning power as measured by GDP is not higher today than it has been in the past. The government can refinance bonds when they mature by selling new bonds in the same way that corporations often do. The government has the power to t necessary thing the size of the which could raise more revenue if 25. (1 pt) True or false? If false, explain why. (Irue. False) The total public debt is more relevant to an economy than the public debt as percentage of GDP. Why: a h (Irue. False) "An internally held debt is like a debt of the left hand to the right hand." Why: (True. False) The Federal Reserve and Federal government agencies hold more than three- fourths of the public debt. Why: c.

Answer 1

23)In 2015 debt was about 104.17 percent of GDP and it fell in 2008 because of massive annual budget deficit.

There may be large fiscal deficits but debt GDP ratio may fall sharply.This is because fast growth makes GDP rise faster than debt .So debt GDP ratio falls.

24)The large Federal debt cannot cause the country to go bankrupt.The government has the power to tax which could raise more revenue if necessary.

As said debt to GDP ratio is less , the government can refinance bonds and raise revenue by taxation.

25)a)False.

The total public debt is one of the measures of debt and is considered less meaningful than debt held by the public as share of gross GDP. Debt to GDP is the ratio between the government debt and its Gross domestic product.The debt to GDP ratio gives indication of how much the country is likely to pay off the debt. So this is a good measure of public debt.

b)True

This is true but this does not show that a large debt is always good and problem free.

c)False

In 2000,the general public held more than 61 %of the public debt.