Quiz #537

• 1. Mainstream economists use the notion of "crowding out" to argue that public spending squeezes out private spending and results in a less efficient allocation of resources overall. Modern Monetary Theory (MMT) denies that crowding out can occur.
• False
• True
• 2. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.
• False
• True
• 3. For a nation running a current account deficit, income adjustments will ensure government fiscal position is in deficit if the domestic private sector successfully increases its overall saving as a percentage of GDP.
• False
• True

Quiz #537 answers

• 1. Mainstream economists use the notion of "crowding out" to argue that public spending squeezes out private spending and results in a less efficient allocation of resources overall. Modern Monetary Theory (MMT) denies that crowding out can occur.

Answer: False

• 2. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.

Answer: True

• 3. For a nation running a current account deficit, income adjustments will ensure government fiscal position is in deficit if the domestic private sector successfully increases its overall saving as a percentage of GDP.

Answer: True