Quiz #339 answers

• 1. An external surplus is a necessary but not sufficient condition for a nation that wishes to grow during a period when the government is running a fiscal surplus and the private domestic sector is net saving.

Answer: True

• 2. If central banks stopped paying a return to the private banks on the reserves they hold with the central bank then the private banks would have a greater incentive to advance credit to the private sector.

Answer: False

• 3. A nation can only start to reduce its public debt to GDP ratio when it succeeds in running primary fiscal surpluses (that is, its spending net of interest payments is less than taxation revenue).

Answer: False