Quiz #322

• 1. In general, the OECD and IMF estimates of the impact of the automatic stabilisers attached to the fiscal balance are biased downwards.
• False
• True
• 2. If there is an external deficit, efforts by the private domestic sector to increase its overall saving as a percentage of GDP, will ensure the government fiscal balance is in deficit, irrespective of what the government desires.
• False
• True
• 3. When a government runs a continuous fiscal deficit, the public spending builds up over time and may eventually exposes the economy to inflation risk.
• False
• True

Quiz #322 answers

• 1. In general, the OECD and IMF estimates of the impact of the automatic stabilisers attached to the fiscal balance are biased downwards.

Answer: True

• 2. If there is an external deficit, efforts by the private domestic sector to increase its overall saving as a percentage of GDP, will ensure the government fiscal balance is in deficit, irrespective of what the government desires.

Answer: True

• 3. When a government runs a continuous fiscal deficit, the public spending builds up over time and may eventually exposes the economy to inflation risk.

Answer: False