Chapter 20, Problem 21AA

To determine

To find: The percentage of foreign ownership of the U.S. debt in 2005 and the new percentage of ownership if it decreased by 20%.

Explanation of Solution

The foreign ownership of the U.S. debt in 2005 was 50%.

If there is a 20% decrease in the ownership which is 50%, the new percentage of ownership will be,

  $\begin{array}{c}\text{Percentage of ownership}=50-20\%\text{of 50}\\ =\text{50}-10\\ =40\end{array}$

The new percentage of ownership will be 40%.

Economics Concept Introduction

Introduction:

Foreign ownership of debt- Foreign investors and corporations own almost 50% of the government securities. This is done by foreign investors to gain more profits. However, foreign corporations have to consider the government policies as they own half of the debt.