Quiz #452 answers

• 1. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.

Answer: True

• 2. For a nation running a current account deficit, national income adjustments will ensure government fiscal balance is in deficit if the private domestic sector seeks to increase its saving overall as a percentage of GDP.

Answer: True

• 3. If the central bank pays a positive interest rate on overnight reserves then it no longer would have to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements).

Answer: False