Quiz #619 answers

• 1. Government spending which is accompanied by a bond sale to the non-government sector adds less to aggregate demand than would be the case if there was no bond sale because some spending capacity in the non-government sector is withdrawn.

Answer: False

• 2. If the external sector is always in surplus, then the government can safely run a surplus and not impede economic growth.

Answer: False

• 3. In a stock-flow consistent macroeconomics, we have to always trace the impact of flows during a period on the relevant stocks at the end of the period. Accordingly, if household consumption expenditure out of disposable income rises by 80 cents in each extra dollar received, then the residual will flow into the stock of saving.

Answer: False