Quiz #327

• 1. If the government achieves in reducing its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.
• False
• True
• 2. When a country runs an external surplus, the national government can safely run a fiscal surplus without impeding economic growth.
• False
• True
• 3. Which fiscal deficit outcome is the most expansionary?
• 1 per cent of GDP
• 2 per cent of GDP
• 3 per cent of GDP
• It depends on the decomposition of the structural and cyclical (automatic stabiliser) components

Quiz #327 answers

• 1. If the government achieves in reducing its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.

Answer: False

• 2. When a country runs an external surplus, the national government can safely run a fiscal surplus without impeding economic growth.

Answer: False

• 3. Which fiscal deficit outcome is the most expansionary?

Answer: 3 per cent of GDP