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Suppose the Malaysian net foreign debt is 50 percent of its GDP and foreign assets and liabilities pay an interest rate of 6 percent per year. What would be the drain on Malaysia GDP (as a percentage) from paying interest on the net foreign debt? Do you think this is a large number? What if the net foreign debt were 100 percent of GDP? At what point do you think a country's government should become worried about the size of its foreign debt?

Suppose the Malaysian net foreign debt is 50 percent of its GDP and foreign assets and liabilities pay an interest rate of 6 percent per year. What would be the drain on Malaysia GDP (as a percentage) from paying interest on the net foreign debt? Do you think this is a large number? What if the net foreign debt were 100 percent of GDP? At what point do you think a country's government should become worried about the size of its foreign debt?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose the Malaysian net foreign debt is 50 percent of its GDP and foreign assets and liabilities pay an interest rate of 6 percent per year. What would be the drain on Malaysia GDP (as a percentage) from paying interest on the net foreign debt? Do you think this is a large number? What if the net foreign debt were 100 percent of GDP? At what point do you think a country's government should become worried about the size of its foreign debt?
Transcribed Image Text:Suppose the Malaysian net foreign debt is 50 percent of its GDP and foreign assets and liabilities pay an interest rate of 6 percent per year. What would be the drain on Malaysia GDP (as a percentage) from paying interest on the net foreign debt? Do you think this is a large number? What if the net foreign debt were 100 percent of GDP? At what point do you think a country's government should become worried about the size of its foreign debt?
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