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Social Studies

Answered

South World has a total debt of $10 million and an annual GDP of $5 million. It currently pays 4% interest on its debt every year. What percentage of annual GDP does interest on the debt represent?

4%

50%

15%

8%

Answer :

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The annual interest on the $10 million debt is,

$10 million x 0.04 = $400,000

$400,000/$5,000,000 = 0.08

$400,000 is 8% of the annual GDP of $5 million

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