Quiz #569 answers

• 1. Adherence to a 'balanced budget rule', measured over a full economic cycle (peak to peak) will force the private domestic sector balance to run a deficit on average if the external balance is in deficit on average over the same cycle.

Answer: True

• 2. Modern Monetary Theory (MMT) teaches us that a sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues:

Answer: The greater is non-government wealth held in the form of public debt.

• 3. A fiscal surplus indicates that the national government is:

Answer: You cannot conclude anything about the government's policy intentions.