1. Use the table below to answer the following questions: 2000 2010 Debt GDP Deb
ID: 2440731 • Letter: 1
Question
1. Use the table below to answer the following questions:
2000
2010
Debt
GDP
Debt
GDP
Greece
$ 138
$ 127
$ 455
$ 308
Ireland
$ 34
$ 98
$ 124
$ 206
Portugal
$ 62
$ 118
$ 203
$ 231
Spain
$ 292
$ 586
$ 734
$ 1,420
a.) Compute the debt-to-GDP ratio for all four nations in both 2000 and 2010. (8 answers total)
b) In your judgement, which of the four nations was in the worst fiscal shape in 2010? Use the computations in part a to justify your answer.
2000
2010
Debt
GDP
Debt
GDP
Greece
$ 138
$ 127
$ 455
$ 308
Ireland
$ 34
$ 98
$ 124
$ 206
Portugal
$ 62
$ 118
$ 203
$ 231
Spain
$ 292
$ 586
$ 734
$ 1,420
Explanation / Answer
(a)
Country - Greece
Year - 2000
Debt = $138
GDP = $127
Calculate debt-to-GDP ratio -
Debt/GDP ratio = Debt/GDP = 138/127 = 1.0866 or 108.66%
The debt-to-GDP ratio in 2000 is 108.66%.
Year - 2010
Debt = $455
GDP = $308
Calculate debt-to-GDP ratio -
Debt/GDP ratio = Debt/GDP = 455/308 = 1.4772 or 147.72%
The debt-to-GDP ratio in 2010 is 147.72%.
Country - Ireland
Year - 2000
Debt = $34
GDP = $98
Calculate debt-to-GDP ratio -
Debt/GDP ratio = Debt/GDP = 34/98 = 0.3469 or 34.69%
The debt-to-GDP ratio in 2000 is 34.69%
Year - 2010
Debt = $124
GDP = $206
Calculate debt-to-GDP ratio -
Debt/GDP ratio = Debt/GDP = 124/206 = 0.6019 or 60.19%
The debt-to-GDP ratio in 2010 is 60.19%
Country - Portugal
Year - 2000
Debt = $62
GDP = $118
Calculate debt-to-GDP ratio -
Debt/GDP ratio = Debt/GDP = 62/118 = 0.5254 or 52.54%
The debt-to-GDP ratio in 2000 is 52.54%
Year - 2010
Debt = $203
GDP = $231
Calculate debt-to-GDP ratio -
Debt/GDP ratio = Debt/GDP = 203/231 = 0.8787 or 87.87%
The debt-to-GDP ratio in 2010 is 87.87%
Country - Spain
Year - 2000
Debt = $292
GDP = $586
Calculate debt-to-GDP ratio -
Debt/GDP ratio = Debt/GDP = 292/586 = 0.4983 or 49.83%
The debt-to-GDP ratio in 2000 is 49.83%
Year - 2010
Debt = $734
GDP = $1,420
Calculate debt-to-GDP ratio -
Debt/GDP ratio = Debt/GDP = 734/1,420 = 0.5169 or 51.69%
The debt-to-GDP ratio in 2010 is 51.69%
(b)
The debt-to-GDP ratio of Greece has increased by the most between 2000 and 2010. In fact, in 2010, debt of Greece is almost 1.5 times of its GDP.
So, out of the four nations, Greece was in the worst fiscal shape in 2010.
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