Explain the reason why the debt-to-GDP ratio in the United States ...

[mydiamond]

Explain the reason why the debt-to-GDP ratio in the United States is expected to explode between now and the year 2042.
 
  What will be an ideal response?

Question 2

The nominal return of money is
 
  A) 0.
  B) r.
  C) R.
  D) i.

[jordangronback]

Answer to Question 1

The debt-to-GDP ratio is expected to explode because government expenditures on transfer programs such as Social Security, Medicare, and Medicaid outpace revenues and are forecast to become more expensive. Expenditures on these programs will increase because the population is aging and health care costs are expected to rise rapidly. Expenditures on Medicaid, Medicare, and Social Security are projected to rise from 10.4 of GDP in 2012 to 18.3 of GDP in 2042. Also, the government has to pay interest on the new debt it issues, so net interest payments are projected to rise dramatically. Interest payments are projected to increase from 1.4 of GDP in 2011 to 11.8 of GDP in 2042.

Answer to Question 2

A

[mydiamond]

Excellent

[ecabral0]

Gracias!