Question: Suppose a country has a national debt of $5,000 billion, a GDP of $10,000 billion, and a budget deficit of $100 billion.
1) How much will its new national debt be? Compute its debt-GDP ratio.
2) Suppose its GDP grows by 1% in the next year and the budget deficit is again $100 billion.
3) Compute its new level of national debt and its new debt-GDP ratio.