Question

Economy X has total government debt of $40,000 and Nominal GDP 60,000. Economy Y has total government debt of $32,000 and Nominal GDP 16,000. (Hint: Economy X is more like the United States; Economy Y is more like Greece in 2011.)Which economy has more svere debt problem?

Answer 1

Answer:

Economy Y more severe debt problem.

Explanation:

Given:

                                       Economy X        Economy Y

Government debt            $40,000            $32,000

Nominal GDP                   $60,000            $16,000

This table shows that Economy Y's Government debt is higher than its Nominal GDP and Economy X's Government debt is lower than its nominal GDP.

Therefore, we say that Economy Y has a more severe debt problem.