Question

Suppose that the annual federal deficit is $350 billion. gross domestic product 'gdp', a measure of the size of the economy is $14.5 trillion ($14,500 billion). calculate the ratio between the deficit and gdp as a percentage rounded to one decimal place:

Answer 1

What we are looking for is the Debt-GDP ratio in percentage. In economics, the debt-to-GDP ratio is the ratio in the middle of a country's government debt (a cumulative amount) and its gross domestic product (GDP) that is measured in years.

Solution: This ratio is calculated as (350 / 14500) x 100 = 0.02414 x 100 = 2.4 (rounded to one decimal place). The deficit is 2.4% of GDP.