Quiz #491

• 1. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):
• A nation can run an external deficit and equal government surplus while the private domestic sector is saving overall.
• A nation can run an external deficit and equal government surplus while the private domestic sector is dis-saving overall.
• A nation can run an external deficit and a larger government surplus while the private domestic sector is saving overall.
• None of the above are possible as they all defy the sectoral balances accounting identity.
• 2. The more funds that commercial banks have on account with the central bank the more they can lend out to customers.
• False
• True
• 3. Modern Monetary Theory (MMT) considers that the public debt ratio is of no concern because economic growth will always bring it down after a recession.
• False
• True

Quiz #491 answers

• 1. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):

Answer: A nation can run an external deficit and equal government surplus while the private domestic sector is dis-saving overall.

• 2. The more funds that commercial banks have on account with the central bank the more they can lend out to customers.

Answer: False

• 3. Modern Monetary Theory (MMT) considers that the public debt ratio is of no concern because economic growth will always bring it down after a recession.

Answer: False