Quiz #333 answers

• 1. If a nation's external sector is in balance then the private domestic sector cannot save overall if the government runs a balanced fiscal outcome.

Answer: True

• 2. A tax increase, which aims to increase tax revenue at the current level of national income by $x, will have a smaller initial negative impact on aggregate demand than a government spending cut of $x?

Answer: True

• 3 If the external sector is accumulating financial claims on the local economy and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can run surpluses without damaging employment growth.

Answer: False