Question

The GDP for the United States is $18,036 billion and its current account balance is –$484 billion. What percent of GDP is the current account balance?

a) 2.68%
b) 1.57%
c) 3.00%
d) 2.69%

Answer 1

To find the percent of GDP that the current account balance represents, divide the current account balance by the GDP and multiply by 100. The absolute value of this calculation is approximately 2.684%, which rounds to 2.68%, corresponding to option (a).

Step-by-step explanation:

To calculate what percent of GDP the current account balance is, you use the formula:

Percent of GDP = (Current Account Balance / GDP) × 100

Substitute the given values into the formula:

Percent of GDP = (-$484 billion / $18,036 billion) × 100

First, calculate the division:

Percent of GDP = -0.02684 (rounded to five decimal places)

Then, multiply by 100 to find the percentage:

Percent of GDP = -0.02684 × 100

Percent of GDP = -2.684%

Since we are looking for the magnitude of the ratio without considering the direction of the current account balance (deficit or surplus), we can take the absolute value:

Absolute percent of GDP = 2.684%

The closest answer corresponds to option (a) 2.68%.