Quiz #391

• 1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, until we know the relative magnitudes of these balances, we are unable to conclude the state of the fiscal balance.
• False
• True
• 2. A fiscal deficit means that the stock of government spending is larger than the tax revenue it receives.
• False
• True
• 3. The only obvious thing we can conclude when a government records a fiscal surplus is that the government is seeking to attenuate the growth in aggregate spending by withdrawing net spending from the economy.
• False
• True

Quiz #391 answers

• 1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, until we know the relative magnitudes of these balances, we are unable to conclude the state of the fiscal balance.

Answer: False

• 2. A fiscal deficit means that the stock of government spending is larger than the tax revenue it receives.

Answer: False

• 3. The only obvious thing we can conclude when a government records a fiscal surplus is that the government is seeking to attenuate the growth in aggregate spending by withdrawing net spending from the economy.

Answer: False