help! CAD as GDP (1 Viewer)

[lostki3nt_au]

can some1 explain why CAD is measured as a % of GDP???

 

[hatty]

something along the lines of that it gives a measurement over time

 

[Shuter]

And I thought I was underprepared.

It is a better measure as this is more indicative of the countries ability to pay back the debt.

 

[masteraal]

it also allows countries to be compared with each other

 

[username]

It gives an accurate indication of the cads relative size of natural output over a period of time.

 

[matt_f64]

it tells u if the CAD is sustainable or not... obviously if the CAD is 99% of GDP then we cant sustain it cos all of our money is going into funding the CAD... but if its only 3-4% then we can sustain it so long as we dont get caught in a debt trap spiral.

 

[olay]

and b/c if you compared CAD's in terms of nominal value [i.e. x dollars] it would not be reflective of the country's ability to pay the debt. a $1 bn CAD in Ethiopia is far more significant than a $1 bn CAD in the USA. which is why a CAD in terms of % of GDP is used to depict the debt's sustainability - not it's nominal value.