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

Answer:

80 trillion

Step-by-step explanation:

Answer 2

Answer:

The correct option is A.

Step-by-step explanation:

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

$\frac{Debt}{GDP}=25\%$

$\frac{Debt}{GDP}=\frac{25}{100}$

$\frac{Debt}{GDP}=\frac{1}{4}$

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.

$\frac{\text{Expected debt after 10 years}}{\text{Expected GDP after 10 years}}=\frac{Debt}{GDP}$

$\frac{20}{x}=\frac{1}{4}$

$20\times 4=1\times x$

$80=x$

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

Therefore the correct option is A.