Quiz #390 answers

• 1. Start from a situation where the external surplus is the equivalent of 2 per cent of GDP and the government fiscal surplus surplus is 2 per cent. If the government fiscal balance stays constant as a per cent of GDP and the external surplus rises to the equivalent of 4 per cent of GDP, then you can conclude that national income also rises and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.

Answer: True

• 2. If all bank loans had to be backed by reserves held at the bank then this would act as a brake on the capacity of the banks to lend and help maintain financial stability.

Answer: False

• 3. Raising taxation revenue is an essential element in a sovereign government's plan to implement and provision its socio-economic agenda.

Answer: True