Quiz #292

• 1. Conservatives have criticised several governments (such as in France and Italy) for not pursuing fiscal austerity programs with sufficient commitment. The fact that these government fiscal deficits continue to increase is evidence of this lack of commitment.
• False
• True
• 2. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would find:
• Fiscal deficit
• Fiscal surplus
• Cannot determine because we would need to know the scale of the private domestic sector saving as a % of GDP.
• 3. The net worth of the non government sector rises if the government issues bonds to match its deficit spending.
• False
• True

Quiz #292 answers

• 1. Conservatives have criticised several governments (such as in France and Italy) for not pursuing fiscal austerity programs with sufficient commitment. The fact that these government fiscal deficits continue to increase is evidence of this lack of commitment.

Answer: False

• 2. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would find:

Answer: Fiscal deficit

• 3. The net worth of the non government sector rises if the government issues bonds to match its deficit spending.

Answer: False