Quiz #198 answers

• 1. The monetary base always adjusts to changes in the money supply rather than the other way around.

Answer: True

• 2. The automatic stabilisers built into the government budget work counter-cyclically to ensure that the budget balance returns to its appropriate level after a cyclical disturbance.

Answer: False

• 3. If the external sector was running a surplus equivalent to 4 per cent of GDP, and the sum of all the private sector spending plans indicated it was desiring to run a surplus overall equivalent to 6 per cent, then the government could safely plan on achieving a budget surplus of 2 per cent of GDP.

Answer: False