Quiz #26

• 1. If the national government is running a daily deficit then at the end of each day you have a positive stock of government net spending.
• False
• True
• 2. If public employment and private employment growth match the growth in the labour force, then unemployment cannot rise.
• False
• True
• 3. If a country runs a permanent external deficit (current account), and its government aims to balance its budget (on average) over the course of a business cycle (peak to peak in GDP), then it means that the government also wants the private domestic sector to run deficits (spend more than they are earning and increase their debt obligations) over the same business cycle.
• False
• True
• 4. It is clear that as the population ages, we will reach some point when the non-government sector will begin to dis-save because individuals no longer have any need to accumulate assets for future consumption. This will mean the government will have to run surpluses as a matter of national accounting.
• False
• True
• 5. The unemployment rate will remain stable if the sum of public and private employment growth is equal to the growth in the labour force.
• False
• True