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In thinking about the size of the current federal debt and deficit relative to the current...

In thinking about the size of the current federal debt and deficit relative to the current level of GDP, explain how you think this information affects peoples' decisions.

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Answer #1

Fed at present (based at the end of year 2017):

Debt on GDP percentage: around 105%, held by the public of the nation

Deficit: 3.4% of GDP; the projection is to increase further (around 4.2%) in the current year

Debt means the amount of loan till date. Deficit means the excess of government expenditures over its incomes within a time period. The above data indicates that both debt and deficit are in increasing trend, which may turn into money crisis in future; in economical term which is known as recession. Such thinking may create fear in people’s mind; they may cut spending today and save for tomorrow in anticipation of better future; although this thinking is not wise, because if everyone do that thing now the economy will start collapsing (shortage of money) very early.

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