1. The more public debt a sovereign government voluntarily issues to match its fiscal deficits:

Answer: the greater is non-government wealth held in the form of public debt.

2. When an external deficit and public deficit coincide, there must be a private sector deficit, which means that governments can only really run fiscal deficits safely to support a private sector surplus, when net exports are strong.

Answer: False

3. In a standard fixed coupon government bond auction, the higher is the demand for the bonds:

Answer: the lower will be the yields on the issued bond, which tells us nothing about the effect of fiscal deficits on short-term interest rates.