What does the public-debt-to-GDP ratio primarily indicate?
Correct answer: B. The size of public debt relative to national output
- A. The annual change in government tax revenue
- B. The size of public debt relative to national output
- C. The average maturity of government securities
- D. The share of debt held by foreign lenders
Explanation
The debt-to-GDP ratio compares the outstanding stock of government debt with the economy's annual output. It is used as a broad indicator of the debt burden and repayment capacity, although interest rates and growth also matter.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
Practise Public Finance
406 free Public Finance MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Economics questions like this
Economics is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Public Finance questions
In fiscal federalism, a vertical fiscal imbalance exists when:
A conditional intergovernmental grant is one that:
What does a government's debt rollover risk mainly refer to?
Under Pakistan's Constitution, expenditure charged upon the Federal Consolidated Fund is:
Seigniorage is best described as government revenue obtained from:
Which statement best describes the assignment principle in public finance?