Quiz #431

• 1. Issuing government debt reduces the risk of inflation arising from deficit spending because the private sector has less money to spend.
• False
• True
• 2. If net exports are running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must be running a surplus equal to 1 per cent of GDP.
• False
• True
• 3. To reduce the public debt ratio, the government has to eventually run primary fiscal surpluses.
• False
• True

Quiz #431 answers

• 1. Issuing government debt reduces the risk of inflation arising from deficit spending because the private sector has less money to spend.

Answer: False

• 2. If net exports are running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must be running a surplus equal to 1 per cent of GDP.

Answer: False

• 3. To reduce the public debt ratio, the government has to eventually run primary fiscal surpluses.

Answer: False