1. Assume that the external deficit of a nation is on average over the economic cycle equal to 2 per cent of GDP and that the government balances its fiscal position when averaged over the same cycle. We can conclude that on average the private domestic sector overall:
Answer: Is spending more than it is earning.
2. Trade unions that manage to push aggregate wages growth ahead of the inflation rate will ensure that workers gain a greater share of national income.
Answer: False
3. Sovereign government spending becomes more expensive when government bond yields for new issues rise.