6. The public debt- Ownership The following table contains approximate figures f
ID: 1216254 • Letter: 6
Question
6. The public debt- Ownership The following table contains approximate figures for gross domestic product (GDP) and the national debt in the United States for June 2003 and Jun 2011. The national debt represents the total amount of money owed by the federal government to holders of U.s. securities. All numbers are in trillions of dollars. Debt Held Outside Fed. Govt. and Fed Reserve GDP (Trillions of Dollars) Total National Debt (Trillions of Dollars) Debt Held by Federal Government Foreign Ownershipu.s. Ownership u.s. ownership CTrillions of Dollars) and Federal(Trillions of Dollars) Reserve (Trillions of Dollars) 3.5 4.6 June 2003 10.8 6.7 1,8 June 2011 15.2 4.3 4.5 Source: "U.S. Treasury, Bureau of Economic Analysis. Publicly held debt is the portion of the national debt that is held outside the federal government and the Federal Reserve System. In June 2003, the publicly held debt as a percentage of total national debt was In June 2003, the percentage of the U.S. national debt held by foreigners wasExplanation / Answer
1. Publicaly held debt = National debt that is held outside the federal government and the Federal Reserve System / Total National debt = (Foreign Ownership + US ownership) / Total National debt = (1.4 + 1.8) / 6.7 = 0.48
2. U.S. national debt held by foreigners = Foreign ownership / total national debt = 1.4/6.7 = 0.21
3. In 2003, fraction of national debt held by foreigners = 1.4/6.7 = 0.21
In 2011, fraction of national debt held by foreigners = 4.5/14.3 = 0.31
So, It increases
4. Publicly held debt as a percentage of GDP in 2003 = Debt outside the federal government and the Federal Reserve / GDP = (1.4 + 1.8) / 10.8
= 0.30
5. Publicly held debt as a percentage of GDP in 2003 = 0.30
Publicly held debt as a percentage of GDP in 2011 = (4.5 + 5.2) / 15.2 = 0.64
So, between 2003 and 2011, publicly held debt as a percentage of GDP increases.
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