Question

5. The public debt - ownership

The following table contains approximate figures for gross domestic product (GDP) and the national debt in the United States for June 2001 and June 2010. The national debt represents the total amount of money owed by the federal government to holders of U.S. securities. All numbers are in trillions of dollars.

	GDP	Total National Debt	Debt Held by	Debt Held Outside Fed. Govt. and Fed. Reserve
	(Trillions of Dollars)	(Trillions of Dollars)	U.S. Government Agencies	Foreign Ownership	U.S. Ownership
			(Trillions of Dollars)	(Trillions of Dollars)	(Trillions of Dollars)
June 2001	10.1	5.7	3.0	1.0	1.7
June 2010	14.5	13.2	4.6	4.0	4.6

Source: “U.S. Treasury, Bureau of Economic Analysis.”

The net national debt is the portion of the national debt held outside the federal government (government agencies and the Federal Reserve System). In June 2001, the net national debt as a percentage of total national debt was  "50.3" "47.4" "50.8" "55.1" %?

In June 2001, the percentage of the U.S. national debt held by foreigners was "17.5" "18.9" " 18.0" "19.6" %?

The fraction of the national debt held by foreigners will eventually need to be repaid to foreigners, thereby reducing the collective purchasing power of Americans. Between 2001 and 2010, the fraction of the national debt held by foreigners "Decreased" or "Increased"

The absolute level of the debt does not necessarily provide a clear indication of a nation's debt burden. Thus, economists often look at relative measures of the national debt. One possible relative measure of the national debt is the net national debt as a percentage of GDP. In 2001, the net national debt was "26.7" "44.9" "49.7" "49.2" %   of GDP. Between 2001 and 2010, the net national debt as a percentage of GDP "Increased" or "Decreased"

Answer 1

We know that the net national debt is the portion of the national debt held outside the federal government.

1. In June 2001 net national debt as percentage to total national debt was = (foreign ownership + US ownership) / total national debt

= (1+1.7) / 5.7 = 2.7 / 5.7 = 0.474

In percentage terms we multiply it by 100 to get 47.4%

So, answer is 47.4%

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2. In June 2001, the percentage of the U.S. national debt held by foreigners was = 1/ 5.7 = 0.175

In percentage terms we multiply it by 100 to get 17.5%

So, answer is 17.5%

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3. The fraction of national debt held by foreigners in June 2001 was = 17.5% ( from previous question)

The fraction of national debt held by foreigners in June 2010 was = 4/ 13.2 = 0.303 i.e. 30.3 %

So, the fraction of national debt held by foreignershas increased.

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4. In 2001 June the net national debt as a percentage of GDP = (foreign ownership + US ownership) / GDP = (1+1.7) / 10.1 = 0.267

In percentage terms we multiply it by 100 to get 26.7%

So, answer is 26.7%

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5. net national debt as a percentage of GDP in June 2001 was = 26.7% ( from previous question)

and

net national debt as a percentage of GDP in June 2010 was = (4+4.6) / 14.5 = 8.6/ 14.5 = 0.593

In percentage terms we multiply it by 100 to get 59.3%

So, the net national debt as a percentage of GDP has Increased