Question

What are two ways the debt to GDP ratio can decrease?

Answer 1

Answer:

Decrease government spending and stimulate economic growth.

Step-by-step explanation:

The debt to GDP ratio is essentially the relationship between a nation's government debt and it's productive value (goods and services produced). A lower ratio is generally considered good as that means the economy can cover its debts, but there are other important factors like the nature of the debt which influences the impact.

Decreasing government spending is the first way to lower the debt ratio. If spending is reduced, government will issue less bonds to finance that spending, thus lowering its debt.

Another way is to increase the output of the economy. The most common way to do that is to cut interest rates - it encourages commercial lending and spending, stimulating economic growth.

Answer 2

Think of debt to GDP as a fraction. Debt / GDP 

So the two ways the ratio can decrease is if the nominator decreases (for example 2/3 goes to 1/3), or the denominator increases (1/3 goes to 1/4). 
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