Quiz #176

• 1. A program of fiscal austerity which yields a budget surplus will always undermine attempts by the private domestic sector to save overall when the nation's exports are less than the sum of their imports and net income flows.
• False
• True
• 2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP).
• A nation can run an external deficit and equal government surplus while the private domestic sector is saving overall.
• A nation can run an external deficit and equal government surplus while the private domestic sector is dis-saving overall.
• A nation can run an external deficit and a larger government surplus while the private domestic sector is saving overall.
• None of the above are possible as they all defy the sectoral balances accounting identity.
• 3. The more funds that commercial banks have on account with the central bank the more they can lend to customers.
• False
• True
• 4. If governments sought funding from the central bank for their net spending (deficits) rather than private bond markets then the inflation risk of such spending would remain unchanged.
• False
• True
• 5. Premium Question: Modern Monetary Theory (MMT) considers that the public debt ratio is of no concern because economic growth will always bring it down after a recession.
• False
• True

Quiz #176 answers

• 1. A program of fiscal austerity which yields a budget surplus will always undermine attempts by the private domestic sector to save overall when the nation's exports are less than the sum of their imports and net income flows.

Answer: True

• 2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP).

Answer: A nation can run an external deficit and equal government surplus while the private domestic sector is dis-saving overall.

• 3. The more funds that commercial banks have on account with the central bank the more they can lend to customers.

Answer: False

• 4. If governments sought funding from the central bank for their net spending (deficits) rather than private bond markets then the inflation risk of such spending would remain unchanged.

Answer: True

• 5. Premium Question: Modern Monetary Theory (MMT) considers that the public debt ratio is of no concern because economic growth will always bring it down after a recession.

Answer: False