1. A nation running a very small current account deficit with the private domestic sector spending less than its income, will always be running a budget deficit at the current national income level.

Answer: True

2. A declining budget deficit or increasing budget surplus signals an intention by the government to attenuate the growth in aggregate demand.

Answer: False

3. Greek or Spanish export competitiveness (within the Eurozone) will increase if they can successfully reduce domestic wages and prices relative to other nations irrespective of the impact of this policy on real GDP growth.

Answer: False