The graph thatrepresents the FRED data on gross federal debt held by the public as a percent of GDP for the United States, the periods during the ratio of federal debt to GDP decline, and rise rapidly, and the explanation of main causes behind the debt expansion.

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Answer 1

Question

Chapter 1, Problem 5WWMD

To determine

The graph thatrepresents the FRED data on gross federal debt held by the public as a percent of GDP for the United States, the periods during the ratio of federal debt to GDP decline, and rise rapidly, and the explanation of main causes behind the debt expansion.

Expert Solution & Answer

Explanation of Solution

The dept to GDP ratio is the comparison of public debt of a country to its gross domestic product. This ratio indicates the ability to pay back debts of a particular country.

The following table represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

Date	Gross federal debt as % of GDP
1945-01-01	103.15473
1946-01-01	106.31331
1947-01-01	89.85802
1948-01-01	78.80700
1949-01-01	78.64942
1950-01-01	73.04212
1951-01-01	61.77323
1952-01-01	58.47428
1953-01-01	56.11251
1954-01-01	57.48318
1955-01-01	53.25775
1956-01-01	49.44887
1957-01-01	46.26202
1958-01-01	47.02543
1959-01-01	44.99151
1960-01-01	43.65927
1961-01-01	42.40408
1962-01-01	41.06497
1963-01-01	39.84620
1964-01-01	37.51863
1965-01-01	35.13456
1966-01-01	32.41892
1967-01-01	31.00151
1968-01-01	30.77656
1969-01-01	27.32861
1970-01-01	26.38584
1971-01-01	26.01193
1972-01-01	25.20503
1973-01-01	23.91650
1974-01-01	22.24246
1975-01-01	23.42567
1976-01-01	25.48292
1977-01-01	26.37588
1978-01-01	25.81648
1979-01-01	24.37071
1980-01-01	24.91507
1981-01-01	24.61458
1982-01-01	27.65127
1983-01-01	31.29577
1984-01-01	32.37061
1985-01-01	34.73859
1986-01-01	38.00743
1987-01-01	38.92310
1988-01-01	39.17930
1989-01-01	38.83132
1990-01-01	40.44175
1991-01-01	43.66586
1992-01-01	46.00536
1993-01-01	47.36272
1994-01-01	47.11114
1995-01-01	47.17956
1996-01-01	46.25348
1997-01-01	43.97875
1998-01-01	41.05898
1999-01-01	37.71703
2000-01-01	33.25873
2001-01-01	31.37078
2002-01-01	32.37257
2003-01-01	34.15357
2004-01-01	35.16944
2005-01-01	35.22534
2006-01-01	34.95575
2007-01-01	34.84050
2008-01-01	39.44241
2009-01-01	52.21632
2010-01-01	60.15788
2011-01-01	65.16421
2012-01-01	69.64929
2013-01-01	71.38997
2014-01-01	72.91443
2015-01-01	71.97179
2016-01-01	75.70168
2017-01-01	75.13234
2018-01-01	76.52784

The following graph represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

EBK MACROECONOMICS, Chapter 1, Problem 5WWMD

The post-1945 period is considered to be the post-war era. Just after the Second World War in 1946 (the debt ratio was a high of 10,31331), the United States experienced sustained declines in the federal debt-to-GDP ratio. The decrease in the federal debt-to-GDP ratio lasts until 1974 (22.24246 debt-to-GDP ratio).

The most critical period of debt growth is the 1980 to 1995. The next biggest increase was from 1974 to 1979. The debt has exploded surprisingly since 2008 (the Great Recession), the period from 2008 to the end of 2013 continues to rise in the federal debt-to-GDP ratio of United States.

The causes of sharp debt-to-GDP ratio expansion are the rising income inequality of the country and its persistent deficit.

President N's decision to dissociate the dollar from the gold standard in 1971 was the first reason behind persistent deficit because dollars were no longer exchanged for gold and the government was free to spend as long as it could, worsening the deficits.

High income disparities and large deficits result in spending inequalities, so rise in the amount of U.S. debt persists as a weapon that can keep the economy from slowing down and increase unemployment.

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Calculating the debt to GDP ratio Suppose the following statistics characterize the financial health of the hypothetical economy Debtenburg at the end of 2017: • Gross domestic product (GDP) is equal to $180 billion. • The national debt is equal to $234 billion. • The government has a budget deficit of $9 billion. • The debt ceiling in Debtenburg is set at $253 billion. The following calculations help you see how the ratio of debt to GDP changes from one year to the next. Complete the first row of the following table by computing the ratio of national debt to GDP. Suppose that nominal GDP remains at $180 billion in 2018, and again the government runs a budget deficit of $9 billion. For simplicity, assume the interest rate on the national debt is 0%, and no payments are being made to reduce the debt. Calculate national debt and the debt-to-GDP ratio in 2018. Enter these values in the second row of the following table. Year GDP National Debt Ratio…

Suppose the following statistics characterize the financial health of the hypothetical economy Debtenburg at the end of 2017: - GDP is equal to $150 billion - The national debt is equal to $180 billion - The government has a budget deficit of $9 billion - The debt ceiling in Debtenburg is set at $198 billion The following calculations help you see how the ratio of debt to GDP changes from one year to the next. Complete the first row of the following table by computing the ratio of national debt to GDP. Suppose that nominal GDP remains at $150 billion in 2018, and again the government runs a budget deficit of $9 billion. For simplicity, assume the interest rate on the national debt is 0%, and no payments are being made to reduce the debt. Calculate national debt and the debt-to-GDP ratio in 2018. Enter these values in the second row of the following table. Now that the government’s national debt has been growing for several years, investors have become worried that the…

Now that the government's national debt has been growing for several years, investors have become worried that the government might default on its debt-that is, might refuse to pay back the investors. As a result, the investors are now willing to lend to the government only if they receive an interest rate of 10%. If the government runs a budget defict of $10 billion in 2019, the national debt will increase by 5 True or False: At the end of 2019, the government of Debtenburg will exceed the legal limit on how much it can borrow. True O False billion.

Answer 2

Question

Chapter 1, Problem 5WWMD

To determine

The graph thatrepresents the FRED data on gross federal debt held by the public as a percent of GDP for the United States, the periods during the ratio of federal debt to GDP decline, and rise rapidly, and the explanation of main causes behind the debt expansion.

Expert Solution & Answer

Explanation of Solution

The dept to GDP ratio is the comparison of public debt of a country to its gross domestic product. This ratio indicates the ability to pay back debts of a particular country.

The following table represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

Date	Gross federal debt as % of GDP
1945-01-01	103.15473
1946-01-01	106.31331
1947-01-01	89.85802
1948-01-01	78.80700
1949-01-01	78.64942
1950-01-01	73.04212
1951-01-01	61.77323
1952-01-01	58.47428
1953-01-01	56.11251
1954-01-01	57.48318
1955-01-01	53.25775
1956-01-01	49.44887
1957-01-01	46.26202
1958-01-01	47.02543
1959-01-01	44.99151
1960-01-01	43.65927
1961-01-01	42.40408
1962-01-01	41.06497
1963-01-01	39.84620
1964-01-01	37.51863
1965-01-01	35.13456
1966-01-01	32.41892
1967-01-01	31.00151
1968-01-01	30.77656
1969-01-01	27.32861
1970-01-01	26.38584
1971-01-01	26.01193
1972-01-01	25.20503
1973-01-01	23.91650
1974-01-01	22.24246
1975-01-01	23.42567
1976-01-01	25.48292
1977-01-01	26.37588
1978-01-01	25.81648
1979-01-01	24.37071
1980-01-01	24.91507
1981-01-01	24.61458
1982-01-01	27.65127
1983-01-01	31.29577
1984-01-01	32.37061
1985-01-01	34.73859
1986-01-01	38.00743
1987-01-01	38.92310
1988-01-01	39.17930
1989-01-01	38.83132
1990-01-01	40.44175
1991-01-01	43.66586
1992-01-01	46.00536
1993-01-01	47.36272
1994-01-01	47.11114
1995-01-01	47.17956
1996-01-01	46.25348
1997-01-01	43.97875
1998-01-01	41.05898
1999-01-01	37.71703
2000-01-01	33.25873
2001-01-01	31.37078
2002-01-01	32.37257
2003-01-01	34.15357
2004-01-01	35.16944
2005-01-01	35.22534
2006-01-01	34.95575
2007-01-01	34.84050
2008-01-01	39.44241
2009-01-01	52.21632
2010-01-01	60.15788
2011-01-01	65.16421
2012-01-01	69.64929
2013-01-01	71.38997
2014-01-01	72.91443
2015-01-01	71.97179
2016-01-01	75.70168
2017-01-01	75.13234
2018-01-01	76.52784

The following graph represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

EBK MACROECONOMICS, Chapter 1, Problem 5WWMD

The post-1945 period is considered to be the post-war era. Just after the Second World War in 1946 (the debt ratio was a high of 10,31331), the United States experienced sustained declines in the federal debt-to-GDP ratio. The decrease in the federal debt-to-GDP ratio lasts until 1974 (22.24246 debt-to-GDP ratio).

The most critical period of debt growth is the 1980 to 1995. The next biggest increase was from 1974 to 1979. The debt has exploded surprisingly since 2008 (the Great Recession), the period from 2008 to the end of 2013 continues to rise in the federal debt-to-GDP ratio of United States.

The causes of sharp debt-to-GDP ratio expansion are the rising income inequality of the country and its persistent deficit.

President N's decision to dissociate the dollar from the gold standard in 1971 was the first reason behind persistent deficit because dollars were no longer exchanged for gold and the government was free to spend as long as it could, worsening the deficits.

High income disparities and large deficits result in spending inequalities, so rise in the amount of U.S. debt persists as a weapon that can keep the economy from slowing down and increase unemployment.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 1, Problem 5WWMD

To determine

The graph thatrepresents the FRED data on gross federal debt held by the public as a percent of GDP for the United States, the periods during the ratio of federal debt to GDP decline, and rise rapidly, and the explanation of main causes behind the debt expansion.

Expert Solution & Answer

Explanation of Solution

The dept to GDP ratio is the comparison of public debt of a country to its gross domestic product. This ratio indicates the ability to pay back debts of a particular country.

The following table represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

Date	Gross federal debt as % of GDP
1945-01-01	103.15473
1946-01-01	106.31331
1947-01-01	89.85802
1948-01-01	78.80700
1949-01-01	78.64942
1950-01-01	73.04212
1951-01-01	61.77323
1952-01-01	58.47428
1953-01-01	56.11251
1954-01-01	57.48318
1955-01-01	53.25775
1956-01-01	49.44887
1957-01-01	46.26202
1958-01-01	47.02543
1959-01-01	44.99151
1960-01-01	43.65927
1961-01-01	42.40408
1962-01-01	41.06497
1963-01-01	39.84620
1964-01-01	37.51863
1965-01-01	35.13456
1966-01-01	32.41892
1967-01-01	31.00151
1968-01-01	30.77656
1969-01-01	27.32861
1970-01-01	26.38584
1971-01-01	26.01193
1972-01-01	25.20503
1973-01-01	23.91650
1974-01-01	22.24246
1975-01-01	23.42567
1976-01-01	25.48292
1977-01-01	26.37588
1978-01-01	25.81648
1979-01-01	24.37071
1980-01-01	24.91507
1981-01-01	24.61458
1982-01-01	27.65127
1983-01-01	31.29577
1984-01-01	32.37061
1985-01-01	34.73859
1986-01-01	38.00743
1987-01-01	38.92310
1988-01-01	39.17930
1989-01-01	38.83132
1990-01-01	40.44175
1991-01-01	43.66586
1992-01-01	46.00536
1993-01-01	47.36272
1994-01-01	47.11114
1995-01-01	47.17956
1996-01-01	46.25348
1997-01-01	43.97875
1998-01-01	41.05898
1999-01-01	37.71703
2000-01-01	33.25873
2001-01-01	31.37078
2002-01-01	32.37257
2003-01-01	34.15357
2004-01-01	35.16944
2005-01-01	35.22534
2006-01-01	34.95575
2007-01-01	34.84050
2008-01-01	39.44241
2009-01-01	52.21632
2010-01-01	60.15788
2011-01-01	65.16421
2012-01-01	69.64929
2013-01-01	71.38997
2014-01-01	72.91443
2015-01-01	71.97179
2016-01-01	75.70168
2017-01-01	75.13234
2018-01-01	76.52784

The following graph represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

EBK MACROECONOMICS, Chapter 1, Problem 5WWMD

The post-1945 period is considered to be the post-war era. Just after the Second World War in 1946 (the debt ratio was a high of 10,31331), the United States experienced sustained declines in the federal debt-to-GDP ratio. The decrease in the federal debt-to-GDP ratio lasts until 1974 (22.24246 debt-to-GDP ratio).

The most critical period of debt growth is the 1980 to 1995. The next biggest increase was from 1974 to 1979. The debt has exploded surprisingly since 2008 (the Great Recession), the period from 2008 to the end of 2013 continues to rise in the federal debt-to-GDP ratio of United States.

The causes of sharp debt-to-GDP ratio expansion are the rising income inequality of the country and its persistent deficit.

President N's decision to dissociate the dollar from the gold standard in 1971 was the first reason behind persistent deficit because dollars were no longer exchanged for gold and the government was free to spend as long as it could, worsening the deficits.

High income disparities and large deficits result in spending inequalities, so rise in the amount of U.S. debt persists as a weapon that can keep the economy from slowing down and increase unemployment.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 1, Problem 5WWMD

To determine

The graph thatrepresents the FRED data on gross federal debt held by the public as a percent of GDP for the United States, the periods during the ratio of federal debt to GDP decline, and rise rapidly, and the explanation of main causes behind the debt expansion.

Expert Solution & Answer

Explanation of Solution

The dept to GDP ratio is the comparison of public debt of a country to its gross domestic product. This ratio indicates the ability to pay back debts of a particular country.

The following table represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

Date	Gross federal debt as % of GDP
1945-01-01	103.15473
1946-01-01	106.31331
1947-01-01	89.85802
1948-01-01	78.80700
1949-01-01	78.64942
1950-01-01	73.04212
1951-01-01	61.77323
1952-01-01	58.47428
1953-01-01	56.11251
1954-01-01	57.48318
1955-01-01	53.25775
1956-01-01	49.44887
1957-01-01	46.26202
1958-01-01	47.02543
1959-01-01	44.99151
1960-01-01	43.65927
1961-01-01	42.40408
1962-01-01	41.06497
1963-01-01	39.84620
1964-01-01	37.51863
1965-01-01	35.13456
1966-01-01	32.41892
1967-01-01	31.00151
1968-01-01	30.77656
1969-01-01	27.32861
1970-01-01	26.38584
1971-01-01	26.01193
1972-01-01	25.20503
1973-01-01	23.91650
1974-01-01	22.24246
1975-01-01	23.42567
1976-01-01	25.48292
1977-01-01	26.37588
1978-01-01	25.81648
1979-01-01	24.37071
1980-01-01	24.91507
1981-01-01	24.61458
1982-01-01	27.65127
1983-01-01	31.29577
1984-01-01	32.37061
1985-01-01	34.73859
1986-01-01	38.00743
1987-01-01	38.92310
1988-01-01	39.17930
1989-01-01	38.83132
1990-01-01	40.44175
1991-01-01	43.66586
1992-01-01	46.00536
1993-01-01	47.36272
1994-01-01	47.11114
1995-01-01	47.17956
1996-01-01	46.25348
1997-01-01	43.97875
1998-01-01	41.05898
1999-01-01	37.71703
2000-01-01	33.25873
2001-01-01	31.37078
2002-01-01	32.37257
2003-01-01	34.15357
2004-01-01	35.16944
2005-01-01	35.22534
2006-01-01	34.95575
2007-01-01	34.84050
2008-01-01	39.44241
2009-01-01	52.21632
2010-01-01	60.15788
2011-01-01	65.16421
2012-01-01	69.64929
2013-01-01	71.38997
2014-01-01	72.91443
2015-01-01	71.97179
2016-01-01	75.70168
2017-01-01	75.13234
2018-01-01	76.52784

The following graph represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

EBK MACROECONOMICS, Chapter 1, Problem 5WWMD

The post-1945 period is considered to be the post-war era. Just after the Second World War in 1946 (the debt ratio was a high of 10,31331), the United States experienced sustained declines in the federal debt-to-GDP ratio. The decrease in the federal debt-to-GDP ratio lasts until 1974 (22.24246 debt-to-GDP ratio).

The most critical period of debt growth is the 1980 to 1995. The next biggest increase was from 1974 to 1979. The debt has exploded surprisingly since 2008 (the Great Recession), the period from 2008 to the end of 2013 continues to rise in the federal debt-to-GDP ratio of United States.

The causes of sharp debt-to-GDP ratio expansion are the rising income inequality of the country and its persistent deficit.

President N's decision to dissociate the dollar from the gold standard in 1971 was the first reason behind persistent deficit because dollars were no longer exchanged for gold and the government was free to spend as long as it could, worsening the deficits.

High income disparities and large deficits result in spending inequalities, so rise in the amount of U.S. debt persists as a weapon that can keep the economy from slowing down and increase unemployment.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 1, Problem 5WWMD

To determine

The graph thatrepresents the FRED data on gross federal debt held by the public as a percent of GDP for the United States, the periods during the ratio of federal debt to GDP decline, and rise rapidly, and the explanation of main causes behind the debt expansion.

Expert Solution & Answer

Explanation of Solution

The dept to GDP ratio is the comparison of public debt of a country to its gross domestic product. This ratio indicates the ability to pay back debts of a particular country.

The following table represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

Date	Gross federal debt as % of GDP
1945-01-01	103.15473
1946-01-01	106.31331
1947-01-01	89.85802
1948-01-01	78.80700
1949-01-01	78.64942
1950-01-01	73.04212
1951-01-01	61.77323
1952-01-01	58.47428
1953-01-01	56.11251
1954-01-01	57.48318
1955-01-01	53.25775
1956-01-01	49.44887
1957-01-01	46.26202
1958-01-01	47.02543
1959-01-01	44.99151
1960-01-01	43.65927
1961-01-01	42.40408
1962-01-01	41.06497
1963-01-01	39.84620
1964-01-01	37.51863
1965-01-01	35.13456
1966-01-01	32.41892
1967-01-01	31.00151
1968-01-01	30.77656
1969-01-01	27.32861
1970-01-01	26.38584
1971-01-01	26.01193
1972-01-01	25.20503
1973-01-01	23.91650
1974-01-01	22.24246
1975-01-01	23.42567
1976-01-01	25.48292
1977-01-01	26.37588
1978-01-01	25.81648
1979-01-01	24.37071
1980-01-01	24.91507
1981-01-01	24.61458
1982-01-01	27.65127
1983-01-01	31.29577
1984-01-01	32.37061
1985-01-01	34.73859
1986-01-01	38.00743
1987-01-01	38.92310
1988-01-01	39.17930
1989-01-01	38.83132
1990-01-01	40.44175
1991-01-01	43.66586
1992-01-01	46.00536
1993-01-01	47.36272
1994-01-01	47.11114
1995-01-01	47.17956
1996-01-01	46.25348
1997-01-01	43.97875
1998-01-01	41.05898
1999-01-01	37.71703
2000-01-01	33.25873
2001-01-01	31.37078
2002-01-01	32.37257
2003-01-01	34.15357
2004-01-01	35.16944
2005-01-01	35.22534
2006-01-01	34.95575
2007-01-01	34.84050
2008-01-01	39.44241
2009-01-01	52.21632
2010-01-01	60.15788
2011-01-01	65.16421
2012-01-01	69.64929
2013-01-01	71.38997
2014-01-01	72.91443
2015-01-01	71.97179
2016-01-01	75.70168
2017-01-01	75.13234
2018-01-01	76.52784

The following graph represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

EBK MACROECONOMICS, Chapter 1, Problem 5WWMD

The post-1945 period is considered to be the post-war era. Just after the Second World War in 1946 (the debt ratio was a high of 10,31331), the United States experienced sustained declines in the federal debt-to-GDP ratio. The decrease in the federal debt-to-GDP ratio lasts until 1974 (22.24246 debt-to-GDP ratio).

The most critical period of debt growth is the 1980 to 1995. The next biggest increase was from 1974 to 1979. The debt has exploded surprisingly since 2008 (the Great Recession), the period from 2008 to the end of 2013 continues to rise in the federal debt-to-GDP ratio of United States.

The causes of sharp debt-to-GDP ratio expansion are the rising income inequality of the country and its persistent deficit.

President N's decision to dissociate the dollar from the gold standard in 1971 was the first reason behind persistent deficit because dollars were no longer exchanged for gold and the government was free to spend as long as it could, worsening the deficits.

High income disparities and large deficits result in spending inequalities, so rise in the amount of U.S. debt persists as a weapon that can keep the economy from slowing down and increase unemployment.

Answer 6

Chapter 1, Problem 5WWMD

To determine

The graph thatrepresents the FRED data on gross federal debt held by the public as a percent of GDP for the United States, the periods during the ratio of federal debt to GDP decline, and rise rapidly, and the explanation of main causes behind the debt expansion.

Expert Solution & Answer

Explanation of Solution

The dept to GDP ratio is the comparison of public debt of a country to its gross domestic product. This ratio indicates the ability to pay back debts of a particular country.

The following table represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

Date	Gross federal debt as % of GDP
1945-01-01	103.15473
1946-01-01	106.31331
1947-01-01	89.85802
1948-01-01	78.80700
1949-01-01	78.64942
1950-01-01	73.04212
1951-01-01	61.77323
1952-01-01	58.47428
1953-01-01	56.11251
1954-01-01	57.48318
1955-01-01	53.25775
1956-01-01	49.44887
1957-01-01	46.26202
1958-01-01	47.02543
1959-01-01	44.99151
1960-01-01	43.65927
1961-01-01	42.40408
1962-01-01	41.06497
1963-01-01	39.84620
1964-01-01	37.51863
1965-01-01	35.13456
1966-01-01	32.41892
1967-01-01	31.00151
1968-01-01	30.77656
1969-01-01	27.32861
1970-01-01	26.38584
1971-01-01	26.01193
1972-01-01	25.20503
1973-01-01	23.91650
1974-01-01	22.24246
1975-01-01	23.42567
1976-01-01	25.48292
1977-01-01	26.37588
1978-01-01	25.81648
1979-01-01	24.37071
1980-01-01	24.91507
1981-01-01	24.61458
1982-01-01	27.65127
1983-01-01	31.29577
1984-01-01	32.37061
1985-01-01	34.73859
1986-01-01	38.00743
1987-01-01	38.92310
1988-01-01	39.17930
1989-01-01	38.83132
1990-01-01	40.44175
1991-01-01	43.66586
1992-01-01	46.00536
1993-01-01	47.36272
1994-01-01	47.11114
1995-01-01	47.17956
1996-01-01	46.25348
1997-01-01	43.97875
1998-01-01	41.05898
1999-01-01	37.71703
2000-01-01	33.25873
2001-01-01	31.37078
2002-01-01	32.37257
2003-01-01	34.15357
2004-01-01	35.16944
2005-01-01	35.22534
2006-01-01	34.95575
2007-01-01	34.84050
2008-01-01	39.44241
2009-01-01	52.21632
2010-01-01	60.15788
2011-01-01	65.16421
2012-01-01	69.64929
2013-01-01	71.38997
2014-01-01	72.91443
2015-01-01	71.97179
2016-01-01	75.70168
2017-01-01	75.13234
2018-01-01	76.52784

The following graph represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

EBK MACROECONOMICS, Chapter 1, Problem 5WWMD

The post-1945 period is considered to be the post-war era. Just after the Second World War in 1946 (the debt ratio was a high of 10,31331), the United States experienced sustained declines in the federal debt-to-GDP ratio. The decrease in the federal debt-to-GDP ratio lasts until 1974 (22.24246 debt-to-GDP ratio).

The most critical period of debt growth is the 1980 to 1995. The next biggest increase was from 1974 to 1979. The debt has exploded surprisingly since 2008 (the Great Recession), the period from 2008 to the end of 2013 continues to rise in the federal debt-to-GDP ratio of United States.

The causes of sharp debt-to-GDP ratio expansion are the rising income inequality of the country and its persistent deficit.

President N's decision to dissociate the dollar from the gold standard in 1971 was the first reason behind persistent deficit because dollars were no longer exchanged for gold and the government was free to spend as long as it could, worsening the deficits.

High income disparities and large deficits result in spending inequalities, so rise in the amount of U.S. debt persists as a weapon that can keep the economy from slowing down and increase unemployment.

Answer 7

Chapter 1, Problem 5WWMD

To determine

The graph thatrepresents the FRED data on gross federal debt held by the public as a percent of GDP for the United States, the periods during the ratio of federal debt to GDP decline, and rise rapidly, and the explanation of main causes behind the debt expansion.

Answer 8

Expert Solution & Answer

Explanation of Solution

The dept to GDP ratio is the comparison of public debt of a country to its gross domestic product. This ratio indicates the ability to pay back debts of a particular country.

The following table represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

Date	Gross federal debt as % of GDP
1945-01-01	103.15473
1946-01-01	106.31331
1947-01-01	89.85802
1948-01-01	78.80700
1949-01-01	78.64942
1950-01-01	73.04212
1951-01-01	61.77323
1952-01-01	58.47428
1953-01-01	56.11251
1954-01-01	57.48318
1955-01-01	53.25775
1956-01-01	49.44887
1957-01-01	46.26202
1958-01-01	47.02543
1959-01-01	44.99151
1960-01-01	43.65927
1961-01-01	42.40408
1962-01-01	41.06497
1963-01-01	39.84620
1964-01-01	37.51863
1965-01-01	35.13456
1966-01-01	32.41892
1967-01-01	31.00151
1968-01-01	30.77656
1969-01-01	27.32861
1970-01-01	26.38584
1971-01-01	26.01193
1972-01-01	25.20503
1973-01-01	23.91650
1974-01-01	22.24246
1975-01-01	23.42567
1976-01-01	25.48292
1977-01-01	26.37588
1978-01-01	25.81648
1979-01-01	24.37071
1980-01-01	24.91507
1981-01-01	24.61458
1982-01-01	27.65127
1983-01-01	31.29577
1984-01-01	32.37061
1985-01-01	34.73859
1986-01-01	38.00743
1987-01-01	38.92310
1988-01-01	39.17930
1989-01-01	38.83132
1990-01-01	40.44175
1991-01-01	43.66586
1992-01-01	46.00536
1993-01-01	47.36272
1994-01-01	47.11114
1995-01-01	47.17956
1996-01-01	46.25348
1997-01-01	43.97875
1998-01-01	41.05898
1999-01-01	37.71703
2000-01-01	33.25873
2001-01-01	31.37078
2002-01-01	32.37257
2003-01-01	34.15357
2004-01-01	35.16944
2005-01-01	35.22534
2006-01-01	34.95575
2007-01-01	34.84050
2008-01-01	39.44241
2009-01-01	52.21632
2010-01-01	60.15788
2011-01-01	65.16421
2012-01-01	69.64929
2013-01-01	71.38997
2014-01-01	72.91443
2015-01-01	71.97179
2016-01-01	75.70168
2017-01-01	75.13234
2018-01-01	76.52784

The following graph represents the FRED data on gross federal debt held by the public as a percent of GDP for the United States:

EBK MACROECONOMICS, Chapter 1, Problem 5WWMD

The post-1945 period is considered to be the post-war era. Just after the Second World War in 1946 (the debt ratio was a high of 10,31331), the United States experienced sustained declines in the federal debt-to-GDP ratio. The decrease in the federal debt-to-GDP ratio lasts until 1974 (22.24246 debt-to-GDP ratio).

The most critical period of debt growth is the 1980 to 1995. The next biggest increase was from 1974 to 1979. The debt has exploded surprisingly since 2008 (the Great Recession), the period from 2008 to the end of 2013 continues to rise in the federal debt-to-GDP ratio of United States.

The causes of sharp debt-to-GDP ratio expansion are the rising income inequality of the country and its persistent deficit.

President N's decision to dissociate the dollar from the gold standard in 1971 was the first reason behind persistent deficit because dollars were no longer exchanged for gold and the government was free to spend as long as it could, worsening the deficits.

High income disparities and large deficits result in spending inequalities, so rise in the amount of U.S. debt persists as a weapon that can keep the economy from slowing down and increase unemployment.