Quiz #65 answers

• 1. The only way that you can have unbalanced external accounts across nations (some countries with surpluses and other deficits) is because the surplus countries desire to hold financial assets denominated in the currency of the deficit countries.

Answer: True

• 2. Like anything in abundance, it is true that when there is more "money" in the economy its value declines.

Answer: Maybe

• 3. If a national government builds a road and then tears it up again only to rebuild it again later, there is no net gain in employment and national income the second time round.

Answer: False

• 4. The imposition of a fiscal rule at the national government level that the budget is required to be in balance at all times would eliminate budget swings driven by the automatic stabilisers.

Answer: False

• 5. The private domestic sector can save overall even if the government deficit is in surplus as long as net exports are positive. But typically with net exports negative, the government has to run deficits to enable to private domestic sector to save overall.

Answer: True