1. Assume that the current account deficit of a nation is on average over the business cycle equal to 2 per cent of GDP and that the government manages to run a balanced fiscal position when averaged over the same cycle. We can conclude that on average the private domestic sector overall is becoming increasingly indebted.

Answer: True

2. Trade unions can ensure that workers gain a greater share of national income if they attain aggregate wages growth greater than the inflation rate.

Answer: False

3. Sovereign government spending becomes more expensive when government bond yields for new issues rise.

Answer: False