Quiz #414

• 1. The private domestic sector cannot save if a nation's external sector is in balance (and thus making no contribution to real GDP growth) and the government runs a balanced fiscal position.
• False
• True
• 2. Continually expanding the money supply will inevitably be inflationary.
• False
• True
• 3. By voluntarily issuing debt to match its net spending, government borrowing from the private domestic sector reduces, but does not eliminate, the risk that public deficits will be inflationary.
• False
• True

Quiz #414 answers

• 1. The private domestic sector cannot save if a nation's external sector is in balance (and thus making no contribution to real GDP growth) and the government runs a balanced fiscal position.

Answer: False

• 2. Continually expanding the money supply will inevitably be inflationary.

Answer: False

• 3. By voluntarily issuing debt to match its net spending, government borrowing from the private domestic sector reduces, but does not eliminate, the risk that public deficits will be inflationary.

Answer: False