Quiz #526 answers

• 1. The public debt ratio will always fall when economic growth is positive because the primary deficit falls due to the automatic stabilisers (more tax revenue, less welfare spending) and the denominator GDP rises.

Answer: False

• 2. The automatic stabilisers work in a counter-cyclical fashion and ensure that the government fiscal balance returns to its appropriate level.

Answer: False

• 3. The monetary base always adjusts to the realised demand for credit by bank customers.

Answer: True