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Methods used to measurements of national debts and their problems?
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Methods used to measurements of national debts and their problems?
Methods of measuring national debts
- Debt-to-GDP ratio: This method compares a country's total debt to its gross domestic product (GDP). It is a commonly used indicator to assess a country's ability to pay off its debt.
- Per capita debt: This method calculates the average amount of debt each citizen owes. It provides a more personalized perspective on the burden of debt on individuals.
- Debt service ratio: This method measures the ratio of a country's debt payments to its total revenue. It helps in evaluating whether a country can meet its debt obligations.
- External debt: This method focuses on a country's debt owed to foreign creditors. It is crucial in assessing a country's vulnerability to external economic shocks.

Problems with measuring national debts
- Inaccurate data: National debt figures can be inaccurate due to misreporting, hidden debts, or off-balance sheet liabilities. This can lead to an underestimation or overestimation of a country's debt burden.
- Changing economic conditions: National debt measurements may not account for changing economic conditions such as inflation, economic growth, or exchange rate fluctuations. These factors can affect the accuracy of debt measurements.
- Debt structure: Different types of debt (e.g., short-term vs. long-term debt) have varying implications for a country's financial stability. Focusing solely on the total debt amount may overlook the importance of debt composition.
- Political factors: National debt measurements can be influenced by political agendas, leading to manipulation of data for political gain. This can distort the true picture of a country's debt situation.
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Methods used to measurements of national debts and their problems?
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