1. If the household saving ratio rises, then a nation with an external deficit will move towards recession unless government net spending offsets the contraction in demand.

Answer: False

2. The IMF recently downgraded their real GDP growth estimates. Taking the example of the Spain, it is now projected to contract in real terms by around 1.6 per cent in 2013 rather than 1.7 per cent as previously forecast. Real GDP per employed person is estimated to fall by about 0.9 per cent over the same period and the labour force is contracting slightly by about 0.1 per cent per annum. If average weekly hours worked will remain more or less constant in 2013, these projections would suggest that the unemployment rate will rise in 2013 by:

Answer: 0.6 per cent

3. The Euro member nations would eliminate their exposure to solvency risk if they exited the Eurozone and issued their own floating currency.

Answer: False