Quiz #354

• 1. Issuing government debt reduces the risk of inflation arising from deficit spending because the private sector has less money to spend.
• False
• True
• 2. A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.
• False
• True
• 3. If a government wants to reduce the public debt ratio, then it has to eventually run primary fiscal surpluses (that is, spend less than they raise in taxes).
• False
• True

Quiz #354 answers

• 1. Issuing government debt reduces the risk of inflation arising from deficit spending because the private sector has less money to spend.

Answer: False

• 2. A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.

Answer: True

• 3. If a government wants to reduce the public debt ratio, then it has to eventually run primary fiscal surpluses (that is, spend less than they raise in taxes).

Answer: False