Quiz #589 answers

• 1. A rising household saving ratio combined with an external deficit that is draining aggregate demand, means that the fiscal deficit has to rise to maintain current output growth.

Answer: False

• 2. Assume that total employment grew in a particular month in net terms yet unemployment still rose. You also know that the labour force participation rate fell marginally. Taken together this information tells you that:

Answer: Labour force growth outstripped employment growth but was less than the growth in the working age population.

• 3. The European Commission has temporarily relaxed the fiscal restrictions on national governments that are applicable under the Stability and Growth Pact, which means that the solvency risk facing several EMU members is also temporarily resolved.

Answer: False