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    Gross Federal Debt

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    Is it possible for the gross federal debt to rise in dollar terms but decline as a percentage of GDP? Explain.

    I read that it can, and that it is due to an expanding economy, inflation, businesses and households borrowing $ to buy plants/equipment and homes/consumables, however I do not understand how these reasons are related to the gross federal debt rising and the GDP % declining.

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    Solution Preview

    The federal debt is the total amount government owes to its creditors. We can compare it to GDP by dividing the two values. For example, if the debt is $9 ...

    Solution Summary

    Budget deficit as a percentage of GDP calculations