Quiz #592

• 1. The difference between a situation where the government runs a deficit and matches it with debt-issuance to the non-government sector to a situation where debt is only issued to the central bank is that non-government sector financial wealth rises in the first case.
• False
• True
• 2. If net exports are running at 2 per cent of GDP, and the private domestic sector is saving overall an equivalent of 3 per cent of GDP, the government must be running a surplus equal to 1 per cent of GDP.
• False
• True
• 3. To reduce the public debt ratio, the government has to eventually run primary fiscal surpluses (that is, spend less than they raise in taxes net of interest payments on past debt).
• False
• True