Quiz #307 answers

• 1. Whenever there is an external sector deficit, which is draining overall spending in the domestic economy, the private domestic sector (households and firms) can only save overall if the government sector runs a deficit or balances its fiscal position.

Answer: False

• 2. The debt issued by a currency-issuing government in its own currency is not really a liability because the government can just roll it over continuously and thus they never have to pay it back. This is different to a household, which not only has to service its debt but also has to repay them at the due date.

Answer: False

• 3. The Greek crisis would be significantly eased if it could improve its tax collection arrangements to ensure that it had more financing available to cover its spending.

Answer: True