Government Debt in Advanced Economies Slowing Economic Growth

World Bank President David Malpass says the debt-to-GDP ratios of the advanced economies are higher than ever before and must be lowered to restore a stable environment and the return of economic growth.—cnbc.com

Answer the following questions to check your understanding of the story.

1) What is the debt-to-GDP ratio and why are the debt-to-GDP ratios for the advanced economies higher than ever before?

The debt-to-GDP ratio is the ____________ expressed as a percentage of real GDP, and the debt-to-GDP ratios for the advanced economies are higher than ever before because ____________.

a) total amount the government has borrowed; government budget deficits are large

b) government budget deficit; government budget deficits are large

c) total amount the government has borrowed; GDP is falling

d) government budget deficit; GDP is falling

2) How are government budget deficits bringing slow economic growth in the advanced economies?

Government budget deficits slow economic growth by ___________ interest rates, which ____________.

a) raising; decreases saving

b) lowering; decreases saving

c) raising; crowds out investment

d) lowering; crowds out investment

Government Debt in Advanced Economies Slowing Economic Growth

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