Question

If a country's debt-to-GDP ratio is currently 25% and its debt is expected to grow from $16 trillion to $20 trillion in the next 10 years, what will the country's GDP have to be in 10 years to maintain the current debt-to-GDP ratio? A. $80 trillion B. $4 trillion C. $64 trillion D. $5 trillion

Answer 1

80 trillion

Explanation:

Answer 2

The correct option is A.

Explanation:

It is given that a country's debt-to-GDP ratio is currently 25%.

`(Debt)/(GDP)=25\%`

`(Debt)/(GDP)=(25)/(100)`

`(Debt)/(GDP)=(1)/(4)`

It is given that debt is expected to grow from $16 trillion to $20 trillion in the next 10 years.

Let the expected GDP after 10 years to maintain the current debt-to-GDP ratio be x.

`\frac{\text{Expected debt after 10 years}}{\text{Expected GDP after 10 years}}=(Debt)/(GDP)`

`(20)/(x)=(1)/(4)`

`20* 4=1* x`

`80=x`

The expected GDP after 10 years to maintain the current debt-to-GDP ratio is $80 trillion .

Therefore the correct option is A.