Quiz #454

• 1. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.
• False
• True
• 2. A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, but national income changes will ensure that the private domestic sector is spending more than it earns and accumulating debt.
• False
• True
• 3. Government deficit spending would have a greater expansionary impact on aggregate demand if the central bank bought the public debt to match the deficit instead of a situation where the government matches it deficit by issuing debt to the private sector.
• False
• True

Quiz #454 answers

• 1. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.

Answer: False

• 2. A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, but national income changes will ensure that the private domestic sector is spending more than it earns and accumulating debt.

Answer: True

• 3. Government deficit spending would have a greater expansionary impact on aggregate demand if the central bank bought the public debt to match the deficit instead of a situation where the government matches it deficit by issuing debt to the private sector.

Answer: False