Quiz #149 answers

• 1. During the American Civil War, the Confederate states experienced rising inflation as a result of their war spending in 1861. The Confederate Government could have eased the inflationary impact of this spending by issuing more bonds than it did.

Answer: False

• 2. Eurozone nations can only alter their international competitiveness by reducing domestic wages and prices because they no longer have a floating currency.

Answer: False

• 3. Modern Monetary Theory (MMT) is consistent with the claim that government spending can crowd out private spending.

Answer: True

• 4. In its latest Monthly Budget Review, the US Congressional Budget Office announced that the US "federal budget deficit was $320 billion for the first quarter of fiscal year 2012 ... $49 billion less than the deficit recorded in the same period in fiscal year 2011". Without knowing anything further, you would conclude that the US government has been cutting its discretionary net spending.

Answer: False

• 5. Premium Question: When net exports are negative, government deficits are required if private households are to save overall.

Answer: False