Quiz #419 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. The net financial asset position of the non-government sector is invariant to the decision by government to issue bonds to private dealers to match its deficit spending as against using Overt Monetary Financing.

Answer: True

• 3. When we observe a government recording a fiscal surplus which means it is withdrawing more purchasing power from the economy than it is adding, we know that it is seeking to attenuate the growth in aggregate demand.

Answer: False