Quiz #562

• 1. If austerity led to all national governments simultaneously running public surpluses (which is the aim) then it would be impossible for all their respective private domestic sectors to spend less than they earn.
• False
• True
• 2. A leakage from the spending system can occur via taxation, imports or saving which reduces the expenditure multiplier effect of government spending. Another leakage, which reduces the expansionary impact of government deficit spending on aggregate demand, occurs when the government matches the fiscal deficit with debt-issuance and drains private sector purchasing power.
• False
• True
• 3. The government deficit outcome each year published by the relevant statistical agencies summarises the economic policy stance of the government.
• False
• True
• 4. The largest challenge facing the world in the face of anthropomorphic climate change is:
• The glaciers are melting.
• Sea levels are rising.
• Increased drought, storm and bush fire activity.
• Santa might have to relocate as the North Pole melts.

Quiz #562 answers

• 1. If austerity led to all national governments simultaneously running public surpluses (which is the aim) then it would be impossible for all their respective private domestic sectors to spend less than they earn.

Answer: True

• 2. A leakage from the spending system can occur via taxation, imports or saving which reduces the expenditure multiplier effect of government spending. Another leakage, which reduces the expansionary impact of government deficit spending on aggregate demand, occurs when the government matches the fiscal deficit with debt-issuance and drains private sector purchasing power.

Answer: False

• 3. The government deficit outcome each year published by the relevant statistical agencies summarises the economic policy stance of the government.

Answer: False

• 4. The largest challenge facing the world in the face of anthropomorphic climate change is:

Answer: Santa might have to relocate as the North Pole melts.