Quiz #667 answers

• 1. The automatic stabilisers increase fiscal deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the fiscal outcome to the business cycle would be eliminated if the government followed a fiscal rule that forced them to balance spending and taxation at all times.

Answer: False

• 2. If a nation is enjoying an external deficit, then one other sector must be spending more than it is earning.

Answer: True

• 3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.

Answer: True

• 4. Special Xmas Holiday 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 thus a user of the currency and will have to save, earn or borrow to generate the funds necessary to maintain his equipment.

• 5. We know that Santa has rejected the anti-vaxxer message.

Answer: True