Question

question 9 · 1 point
a growing debt/gdp ratio could mean that, all else the same, ______.
select the correct answer below:
○ the government is running large budget deficits
○ the government is paying down the debt
○ government expenditures are less than tax revenues.
○ the economy is in a growth stage
content attribution
question 10 · 1 point

Explanation:

The debt/GDP ratio is calculated as \(\frac{\text{Debt}}{\text{GDP}}\). If the ratio is growing, it means either debt is increasing or GDP is decreasing (since all else is the same). A large budget deficit (where government spending exceeds tax revenue) leads to borrowing, which increases debt. Paying down debt would decrease the numerator (debt), government expenditures less than tax revenues is a budget surplus (not deficit, so no increase in debt), and a growing economy (growth stage) would increase GDP (which would decrease the ratio if debt is constant).

Answer:

the government is running large budget deficits