Quiz #470 answers

• 1. One interpretation of the sectoral balances decomposition of the national accounts, is that it is impossible for all governments (in all nations) to run public surpluses without impairing growth because it is likely that the private domestic sector in some countries will desire to save overall.

Answer: False

• 2. A rising government deficit will always allow the private domestic sector to increase its saving in nominal terms.

Answer: False

• 3. A rising government deficit indicates an expansionary shift in policy and the challenge is to calibrate that expansion to ensure nominal demand growth does not exceed the real capacity of the economy to respond by increasing real output.

Answer: False