1. A rising public debt ratio during a recession is of no concern because it falls once economic growth resumes.

Answer: False

2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP) - a nation can run a current account deficit:

Answer: Accompanied by a government sector surplus of equal size, while the private domestic sector spends more than it earns.

3. The expansionary impact of deficit spending on aggregate demand will be lower when the government matches its fiscal deficit with debt-issuance compared to a situation where it issues no debt.

Answer: False