The significance of the size of the national debt
The national debt is the total amount the government owes from years of borrowing. A very large national debt can limit what a government can afford to do in the future.
Formula
Debt-to-GDP Ratio = (National Debt ÷ GDP) × 100
Real World
Japan's national debt exceeds 250% of GDP yet has faced relatively low borrowing costs because most debt is held domestically — showing that the significance of debt depends on who holds it and in what currency.
Exam Focus
Always express debt as a percentage of GDP, not in absolute pounds — this allows meaningful comparison across countries and time periods.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
How well did you know this?