Quiz #280 answers

• 1. The Australian government has just introduced harsh new measures against the unemployed. The government is exploiting the popular view that the unemployed on income support benefits live off the hard work of those who pay taxes. The popular view has validity.

Answer: True

• 2. A potential problem with running continuous fiscal deficits is that the spending builds up over time which adds to inflationary pressures.

Answer: False

• 3. If private domestic investment is less than private domestic saving and the external sector is draining aggregate demand then the government fiscal balance has to be in deficit no matter what level of GDP is produced.

Answer: True