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We are studying the national debit and I am not sure about the link between the national debt, interest payments on the debt and the GDP.

Why would economists be very concerned if the annual interest payments on the debt sharply increased as a percentage of GDP?

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Solution Summary

The expert examines the annual interest payments on national debt and the affect on GDP.

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First, national debt is what the US government owes to creditors. The debt is in the form of bonds, notes and any other promissory notes of money to be repaid. The debt is in both short and long term.

Interest is connected to the national debt as any interest is connected to a debt. More money will be repaid than what was borrowed. In the past the US government has been considered such a low risk investment that interest has been quite low compared to investing in other countries.

The GDP is the Gross Domestic Product, products and services that are ...

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