How would an economist distinguish between absolute & relative size of the US public debt. Why is the distinction important?
- OiyLv 61 month agoFavorite Answer
Absolute debts show the market value of debts. It has no meaning in economics. Since there are diferent countries with diferent growth rate, relative debts/GDP has meaning to show the services of debts. The market will give the rating.
- JuanBLv 71 month ago
If you believe the public debt is too much and in favor of reducing it, you would use the absolute size. It you are in favor of excessive public spending and need to convince people it's ok, and we can continue to over spend, you us relative size.