Quiz #615 answers

• 1. When a government runs a continuous deficit (spending more than they are receiving in revenue), the risk is that the accumulated public spending will build up over time and cause inflation.

Answer: False

• 2. If governments allowed the automatic stabilisers built into the government balance to work counter-cyclically and avoided discretionary shifts in fiscal policy, the fiscal balance would return to its appropriate level after a cyclical disturbance.

Answer: False

• 3. If austerity led to all national governments simultaneously running public surpluses (which is the aim) then it would be impossible for all their respective private domestic sectors to save overall unless every country balanced their external positions.

Answer: True

• 4. Special Xmas Question: Santa is having trouble keeping his sled and related delivery infrastructure in working order. But he knows:

Answer: that he is a household and will have to save, earn or borrow to generate the funds necessary for maintenance