Quiz #375 answers

• 1. Higher levels of taxation are necessary to permit the government to spend more in real terms.

Answer: Perhaps

• 2. If a nation is recording a current account deficit, and its private domestic sector tries to increase its saving overall as a percentage of GDP, then income adjustments will ensure the government fiscal balance is in deficit.

Answer: True

• 3. The reason that IMF and OECD estimates of structural fiscal deficits are to be treated with suspicion relates to the fact that typically the implicit estimates of potential GDP are too optimistic.

Answer: False