Quiz #269 answers

• 1. The Australian government brought down its fiscal statement (aka 'The Budget') this week and estimated that its fiscal deficit would shrink from 3.1 per cent of GDP in 2013-14 to 1.8 per cent of GDP in 2014-15. This signals that the government is intending to adopt a less expansionary fiscal policy strategy in 2014-15 than in the previous fiscal year.

Answer: False

• 2. When the government borrows from the private sector to match an increase in net public spending (its deficit), the resulting increase in aggregate demand coming from the deficit spending is less than would be the case if there was no bond sale because the private sector has less money to spend.

Answer: False

• 3. If the external sector is generating a large surplus and is thus contributing strongly to growth, then the national government can safely run fiscal surpluses without impeding economic growth.

Answer: False