Quiz #473

• 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:
• Cannot say for sure as we don't know the pattern of fiscal balances over the cycle.
• Is spending more than it is earning.
• Is spending less that 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.
• False
• True
• 3. Sovereign government spending becomes more expensive when government bond yields for new issues rise.
• False
• True

Quiz #473 answers

• 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.

Answer: False