Debt Is Measured Relative to GDP Because

question 6

Multiple Choice

Debt is measured relative to GDP because:

• A)the ability of a country to pay off its debt depends on its productive capacity.
• B)the ability to produce output depends on the size of the nation's debt.
• C)GDP is always used as a reference point in economics.
• D)as long as this ratio remains high, the government will have no trouble repaying the debt.

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Definitions:

Contract Enforceable

A legally binding agreement that can be upheld in court.

Loan With The Bank

An agreement where a bank lends money to a borrower, who agrees to repay it along with interest over a specified period.

Necessary Funds

Necessary funds refer to the essential money required to finance an operation, activity, or to cover expenses.

New Contract

An agreement created to establish or modify legal obligations between parties that may replace or supplement a previous contract.