Quiz #509 answers

• 1. Higher levels of taxation permit the government to spend more.

Answer: True

• 2. For nations facing strong terms of trade (such as Australia), if the net exports boom is strong enough to push the fiscal balance into surplus and the economy to full employment then it is sensible for the government to accumulate the surpluses in a sovereign fund to create more space for non-inflationary spending in the future.

Answer: False

• 3. The reason estimates of structural fiscal deficits are to be treated with suspicion relates to the fact that typically the associated estimates of potential GDP are too optimistic.

Answer: False