Quiz #557

• 1. Continuous fiscal deficits are more likely to present an inflation risk than one-off deficits designed to meet a short-term private spending decline.
• False
• True
• 2. A nation running an external deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit) will soon be in recession unless the private domestic sector is willing to continually increase its overall indebtedness.
• False
• True
• 3. To maintain financial stability, the monetary base has to be driven by changes in the money supply just as the money multiplier in mainstream macroeconomics textbooks explains.
• False
• True

Quiz #557 answers

• 1. Continuous fiscal deficits are more likely to present an inflation risk than one-off deficits designed to meet a short-term private spending decline.

Answer: False

• 2. A nation running an external deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit) will soon be in recession unless the private domestic sector is willing to continually increase its overall indebtedness.

Answer: True

• 3. To maintain financial stability, the monetary base has to be driven by changes in the money supply just as the money multiplier in mainstream macroeconomics textbooks explains.

Answer: False