Quiz #311

• 1. If the government increases its fiscal deficit as a percentage of GDP it will always squeeze the real resources available for private productive uses.
• False
• True
• 2. For a nation running a current account deficit, national income adjustments will ensure government fiscal balance is in deficit no matter what the government's intentions are if the private domestic sector is spending less than its income.
• False
• True
• 3. A currency-issuing government can avoid issuing debt to the private sector when running a fiscal deficit even if the central bank is targeting a positive short-term policy rate.
• False
• True

Quiz #311 answers

• 1. If the government increases its fiscal deficit as a percentage of GDP it will always squeeze the real resources available for private productive uses.

Answer: True

• 2. For a nation running a current account deficit, national income adjustments will ensure government fiscal balance is in deficit no matter what the government's intentions are if the private domestic sector is spending less than its income.

Answer: True

• 3. A currency-issuing government can avoid issuing debt to the private sector when running a fiscal deficit even if the central bank is targeting a positive short-term policy rate.

Answer: True