Quiz #571

• 1. Estimates of the structural fiscal balances are typically based on overly pessimistic estimates of potential GDP and thus should be disregarded.
• False
• True
• 2. For a nation with a strong terms of trade (and external surplus), it is wise for the government to run fiscal surpluses and accumulate them in a sovereign fund to create more future space for non-inflationary spending.
• False
• True
• 3. A currency-issuing government, that is, one that issues its own floating currency never faces solvency risk with respect to the debt it issues.
• False
• True

Quiz #571 answers

• 1. Estimates of the structural fiscal balances are typically based on overly pessimistic estimates of potential GDP and thus should be disregarded.

Answer: True

• 2. For a nation with a strong terms of trade (and external surplus), it is wise for the government to run fiscal surpluses and accumulate them in a sovereign fund to create more future space for non-inflationary spending.

Answer: False

• 3. A currency-issuing government, that is, one that issues its own floating currency never faces solvency risk with respect to the debt it issues.

Answer: False