Quiz #430

• 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.
• False
• True
• 2. Which fiscal position outcome is the least expansionary?
• (a) A deficit of 1 per cent of GDP
• (b) A deficit of 2 per cent of GDP
• (c) A deficit of 3 per cent of GDP
• (d) Cannot say because it depends on the decomposition of the structural and cyclical components.
• 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.
• False
• True

Quiz #430 answers

• 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.

Answer: False