Quiz #366

• 1. A fact that is overlooked by those promoting austerity programs, is that when economic growth resumes, the automatic stabilisers work in a counter-cyclical fashion to ensure that the government fiscal balance returns to its appropriate level.
• False
• True
• 2. Rising government bond yields for new issues indicate:
• Answers (a) and (d) depending on the situation.
• that private investors consider public debt to be riskier.
• that government spending is increasing the cost of borrowing for private investors.
• that economic growth is reducing private risk assessments of alternative financial investments.
• that government spending is becoming more expensive.
• Answers (b) and (d) depending on the situation.
• 3. When the national government's fiscal balance moves into surplus:
• it is a sign that the government is trying to constrain economic activity.
• it is a sign that the government is worried that inflation is rising.
• you cannot conclude anything about the government's policy intentions.
• Options (a) and (b).