1. Central banks (for example, US Federal Reserve, Reserve Bank of Australia, and the Central Bank of Ireland) conduct monetary policy by setting the short-run interest rate rather than trying to control the money supply which is endogenous.

Answer: False

Explanation: Please read Most bananas are atheists if you want further information and/or post a comment.

2. An economist who believed in Ricardian Equivalence would argue that the boost of retail sales in Australia following the December stimulus package had nothing to do with the $900 cash handout. Households would have merely saved the handout to pay for future tax rises.

Answer: True

Explanation: Please read Deficits should be cut in a recession. Not! if you want further information and/or post a comment.

3. When the German constitutional requirement that the federal budget be balanced at all times comes into force, fiscal policy will become pro-cyclical and destabilising.

Answer: True

Explanation: Please read Structural deficits and automatic stabilisers if you want further information and/or post a comment.

4. The reason estimates of structural budget deficits are to be treated with suspicion relates to the fact that typically the implicit estimates of potential GDP are too optimistic.

Answer: False

Explanation: Please read Structural deficits and automatic stabilisers if you want further information and/or post a comment.

5. The introduction of an employment guarantee where the federal government offers a minimum wage job to anyone who wanted one would require a modest increase in the budget deficit but there would never be a question that a sovereign government could not afford this program.

Answer: False

Explanation: Please read Structural deficits and automatic stabilisers if you want further information and/or post a comment.