Quiz #650 answers

• 1. In a fiat monetary system (for example, US or Australia) with an on-going external deficit, if you desire the domestic private sector to reduce its overall debt levels without employment losses, then you have to support the national government increasing the fiscal deficit beyond the size of the external deficit in line with the private de-leveraging process.

Answer: True

• 2. The only time that a fiscal surplus represents increased national savings is when the government creates a sovereign fund.

Answer: False

• 3. The massive build-up of Chinese holdings of US government debt allowed US citizens to enjoy a higher material standard of living overall at the expense of the residents of China.

Answer: True