Reference no: EM132410250

Question: Upload your individual response of 2-3 paragraphs (about 1 page) to the following questions. Your response will clearly involve some amount of opinion, but do your best at thinking through and analyzing the questions fully before writing your answer. Carefully organize your writing before uploading your response, and any information from outside sources must be cited appropriately using MLA style. You should upload these to the "Assignments" folder. Please be sure you save your assignment as .rtf, .docx, .doc in order to upload. See the attached rubric for how you will be graded on this assignment.

Instructions/Questions

Before addressing the following questions, you will first need to collect some data! Use online websites (such as Wikipedia) to find economic data for Japan, USA, India, Italy, Iraq, and Mexico. Specifically, find recent data for per capita GDP and government debt-to-GDP ratio.

1. Based on the data collected, do you think that debt is a problem faced by economically advanced countries, undeveloped countries, or both? Justify your answer.

2. The United States government has a 100% repayment rate-it has always repaid its debt. Given what we know about risk and return, do you think the USA is generally charged high or low interest rates on borrowing money? Similarly, do you think Iraq (a poor and economically unstable country) is likely to pay high or low interest rates on loans?

3. Explain the concept of "crowding out". Based on the data collected, which of these countries likely has the most extensive "crowding out"? Explain.