Quiz #546 answers

• 1. If the external sector overall is in deficit, it is still possible for the private domestic sector and government sector to run surpluses as long GDP growth is fast enough (the technical condition is that the rate of GDP growth has to be faster than the real interest rate).

Answer: False

• 2. Federal government debt (where there is currency sovereignty) is not really a liability because the government can just roll it over continuously and thus they never have to pay it back. This is different to a household, which not only has to service its debt but also has to repay them at the due date.

Answer: False

• 3. The term "beggar-my-neighbour" strategy describes a situation where a nation pushes its excess supply onto its trading partners is more applicable to Germany than China in the current situation.

Answer: True