Quiz #450

• 1. Continuous fiscal deficits are a greater inflation risk than one-off deficits designed to meet a short-term private spending decline.
• False
• True
• 2. A nation can run a current account deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit) but national income changes will force the private domestic sector to be spending more than it is earning.
• False
• True
• 3. To maintain financial stability, the monetary base has to be driven by changes in the money supply just as the money multiplier in mainstream macroeconomics textbooks explains.
• False
• True

Quiz #450 answers

• 1. Continuous fiscal deficits are a greater inflation risk than one-off deficits designed to meet a short-term private spending decline.

Answer: False

• 2. A nation can run a current account deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit) but national income changes will force the private domestic sector to be spending more than it is earning.

Answer: True

• 3. To maintain financial stability, the monetary base has to be driven by changes in the money supply just as the money multiplier in mainstream macroeconomics textbooks explains.

Answer: False