1. A fiscal deficit equivalent to 5 per cent of GDP always signals a more expansionary fiscal intent from government than a deficit outcome equivalent to 3 per cent of GDP.

Answer: False

2. Government deficit spending which is accompanied by a bond sale to the non-government sector adds less to aggregate demand than would be the case if there was no bond sale accompanying the deficit.

Answer: False

3. If the external balance is always in surplus, then the government can safely run a surplus and not impede economic growth.

Answer: False