Quiz #646 answers

• 1. Larger fiscal deficits as a percentage of GDP mean that there are less real resources available for other productive uses.

Answer: True

• 2. For a nation running an external deficit, income adjustments will ensure government will record a deficit if the domestic private sector seeks to increase its saving overall as a percentage of GDP.

Answer: True

• 3. The payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend increase the overall level of reserves held by the latter (ignore any reserve requirements).

Answer: True