U.S. National Debt vs. GDP

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Difference between American Debt and GDP

In the face of the continually worsening economy, the American debt and the GDP are becoming increasingly important concerns for even regular people. Of course these two factors are much more important to economists and financial analysts, who routinely use GDP and the American debt GDP to assess the state of the U.S. economy. In order to illustrate the importance of these two measures, we take a look at their more significant characteristics.

American Debt
GDP

Definition

The American public debt is a measure used to define the obligations of the federal government of the United States. This debt covers obligations to the Social Security retirement program as well as other government-sanctioned trust funds. It is estimated that the total debt will increase to as much as $9.1 trillion in 2011, an increase of last year’s $7.5 trillion.

The GDP or gross domestic product is the measure of the market value of all goods and services produced in a specific country for a certain period. This measure is often used to determine the standard of living of a particular country.

Significance

The American debt largely determines how much money the government of a particular country owes to its creditors. Just like any other type of budget, the American debt becomes larger when the government spends more money than it amasses. The rise in the amount of debt may cover a period of several years, or even longer. Over the period of the debt, interest may be charged over the principle, and this has the effect of raising the debt considerably.

The GDP represents the market value of the combined products and services of a particular country in a period of one year. This measure typically includes the spending of the country's citizens, as well as the spending of the country’s government. GDP also encompasses the value of items produced in the county that are exported to other countries, although the value of imported items is typically not taken into consideration. In many developed and developing countries, the GDP is the primary means by which the size and status of a country's economy is measured. In most cases, GDP is calculated on a quarterly and yearly basis.

American Debt In Comparison To Other Countries

The American debt is currently estimated at about $8.68 trillion. This figure represents 60.8% of the country's GDP. In comparison, Canada has a national debt amounting to $814.26 billion, a figure that represents 62.3% of the country's GDP. Argentina for its part has a national debt estimated at $293.56 billion, which represents 51% of the country’s GDP.

Compare and Contrast

American debt

  • A measure used to define the obligations of the federal government of the United States
  • Covers obligations to the Social Security retirement program as well as other government-sanctioned trust funds
  • Estimated to increase to as much as $9.1 trillion in 2011

GDP

  • The measure of the market value of all goods and services produced in a specific country for a certain period
  • Often used to determine the standard of living of a particular country

Postscript

: In response to the U.S $9.1 trillion debt, the Republican tea party believes they are correct in bringing on the 2011 government shutdown. Do you feel it is justified?

 
 

Discuss It: comments 1

  • Guest
  • QuickLoans Online wrote on January 2013

One of the economists kept his views on U.S. National Debt stating that if the conditions are still going to be the same and recession strikes it won’t be easy for U.S. to conquer the situation. And looking forward in 2015-16, China would be the strongest country and would be ruling.

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