Quiz #489 answers

• 1. National accounting rules dictate that a national government surplus equals a non-government deficit (and vice-versa). If a national government successfully achieves a fiscal surplus through an austerity program then the private domestic sector must be spending more than it is earning.

Answer: False

• 2. A government's fiscal deficit rises despite the government's stated fiscal austerity stance. We can conclude from the evidence at hand that the austerity mantra of the government doesn't correctly describe its fiscal policy stance.

Answer: False

• 3. The immediate impact on aggregate spending in the economy would be invariant between the government matching its deficit spending with private bond issues and the situation where the government instructed the central bank to buy its bonds to match the deficit.

Answer: True