Quiz #587 answers

• 1. If the current account (on balance of payments) is in deficit and household saving increases as a proportion of disposable income then the government could still run a fiscal surplus without a decline in output and income occurring.

Answer: True

• 2. Politics aside, the central bank can still increase interest rates even if it was legislatively required to directly purchase treasury debt to match the national governments fiscal deficit.

Answer: True

• 3. Domestic deflation (reducing domestic wages and prices relative to other nations), which Eurozone nations are prone to pursue because they have no exchange rate flexibility, may not increase export competitiveness.

Answer: True