Quiz #404

• 1. During the American Civil War, the Confederate states experienced rising inflation as a result of their war spending in 1861. The Confederate Government could have eased the inflationary impact of this spending by issuing more bonds than it did.
• False
• True
• 2. Modern Monetary Theory (MMT) does not reject the claim that government spending can crowd out private spending.
• False
• True
• 3. If there is an external (current account) deficit, then government deficits are required if private households are to save.
• False
• True

Quiz #404 answers

• 1. During the American Civil War, the Confederate states experienced rising inflation as a result of their war spending in 1861. The Confederate Government could have eased the inflationary impact of this spending by issuing more bonds than it did.

Answer: False

• 2. Modern Monetary Theory (MMT) does not reject the claim that government spending can crowd out private spending.

Answer: True

• 3. If there is an external (current account) deficit, then government deficits are required if private households are to save.

Answer: False