If You Divide Nominal Debt by Nominal GDP and Real

question 13

True/False

If you divide nominal debt by nominal GDP and real debt by real GDP,you will get two different answers.

---

Definitions:

Payout Ratios

The proportion of earnings paid out to shareholders in dividends, indicating how much profit is distributed versus retained.

Investors

Persons or organizations that invest funds anticipating financial profits in return.

Expectations Theory

With respect to dividends: a dividend that’s lower than expected will be taken as a negative by investors even if it is larger than previous dividends. A variation on the signaling effect of dividends. With respect to interest rates: A theory explaining the shape of the yield curve. The curve slopes up or down depending on whether expectations about future interest and inflation rates are increasing or decreasing.

Signaling Effect

The signaling effect refers to the idea that actions by a company can provide information to investors about its future prospects.