1. National income would rise each year even if the workers were engaged by government to dig large holes and fill them in again on a daily basis.
Answer: True
2. Which fiscal position outcome is the least expansionary?
Answer: (a) A deficit of 1 per cent of GDP
3. If the government reduces its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.