Quiz #591 answers

• 1. The automatic stabilisers built into the fiscal framework operate in a counter-cyclical fashion and ensure that the government fiscal balance, which rises during a recession, returns to its appropriate level once growth resumes.

Answer: False

• 2. If we observe falling government bond yields then we can assume that investors are viewing sovereign debt less favourably.

Answer: False

• 3. If private domestic investment is less than private domestic saving and the external account is draining aggregate demand then the government fiscal balance will always be in deficit no matter what level of GDP is produced.

Answer: True