1. What is the % of GDP is the national debt?
My Answer: The percentage of GDP is national debt is approx. 77%. Is this correct?
I went and used the latest figure of Real GDP which was the third quarter of 2006 being $11,443,000,000,000.50, which came from the Economic Report of the President “Transmitted to the Congress February 2007.”
I used the current national debt as of May 4, 2007 being $8,816,009,655,724.63 which that information comes from the TreasuryDirect’s website.
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Well, Sarah, you are definately on the right track. And you went to the right sources. However, you made some small errors which need to be fixed.
First, in the Economic Report, you used Real GDP, which expresses GDP in real 2000 dollars. I suggest you use the nominal GNP figure (on the preceeding page). As of the 3rd quarter, the 2006 Nominal GNP is $13,332.6 Billion. (BTW, the .6 means $600 million, not 60 cents.)
You used a 2007 nominal dollar debt figure. To be consistent, the years should match.
The Economic Report also lists the national debt in nominal dollars. The national debt in 2006 was $8451.4 billion. (I would guess the figure is the estimated debt at the end of the 2006 Federal Fiscal year).
So the percentage of GDP I get is 63%.
To calculate the percentage of GDP that is the national debt, you need to divide the national debt by the GDP and then multiply by 100.
In this case, you need to use the nominal GDP and the nominal national debt figures for the same year. In the example given, the nominal GDP for the third quarter of 2006 is $13,332.6 billion, and the nominal national debt for 2006 is $8,451.4 billion.
So, to calculate the percentage of GDP that is the national debt:
Percentage of GDP = (National Debt / GDP) * 100
Percentage of GDP = ($8,451.4 billion / $13,332.6 billion) * 100
Percentage of GDP = 63%
Therefore, the correct percentage of GDP that is the national debt is approximately 63%.