Quiz #477

• 1. If a nation has an external deficit and household saving increases as a proportion of disposable income then the government cannot run a fiscal surplus without output falling.
• False
• True
• 2. Politics aside, the US central bank could still increase interest rates even if the US government instructed it to directly purchase treasury debt to facilitate the national governments fiscal deficit.
• False
• True
• 3. A continuous fiscal deficit leads to public spending building up which while not a problem in the short-run, increases the long-run inflation risk faced by the economy.
• False
• True