Quiz #550

• 1. If there is more "money" in the economy its value inevitably declines.
• False
• True
• 2. If there was a fiscal rule imposed such that the national government had to balance its fiscal position at all times then this would also eliminate the sensitivity of the fiscal outcome to the automatic stabilisers.
• False
• True
• 3. The private domestic sector will always run a deficit (spend more than they earn) exactly equal to the external deficit on average over a complete economic cycle, if the government fiscal position averages out to zero over the same cycle.
• False
• True

Quiz #550 answers

• 1. If there is more "money" in the economy its value inevitably declines.

Answer: False

• 2. If there was a fiscal rule imposed such that the national government had to balance its fiscal position at all times then this would also eliminate the sensitivity of the fiscal outcome to the automatic stabilisers.

Answer: False

• 3. The private domestic sector will always run a deficit (spend more than they earn) exactly equal to the external deficit on average over a complete economic cycle, if the government fiscal position averages out to zero over the same cycle.

Answer: True