Quiz #389 answers

• 1. Modern Monetary Theory (MMT) recognises the potential problem with running continuous fiscal deficits is that the spending builds up over time which adds to inflationary pressures.

Answer: False

• 2. In recent months, we have observed falling government bond yields in most nations which suggests that investors are viewing sovereign debt less favourably as the levels of outstanding debt rises.

Answer: False

• 3. If private domestic investment is less than private domestic saving, and the external sector is draining aggregate spending from the domestic economy, then the government fiscal balance has to be in deficit no matter what level of GDP is produced.

Answer: True