Quiz #676

• 1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, until we know the relative magnitudes of these balances, we are unable to conclude the state of the fiscal balance.
• True
• False
• 2. The initial stock of non-government sector wealth is invariant to the decision by government to issues bonds to match its deficit spending as against not issuing any bonds.
• True
• False
• 3. The stock of government spending continually rises when there are rising fiscal deficits.
• False
• True

Quiz #676 answers

• 1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, until we know the relative magnitudes of these balances, we are unable to conclude the state of the fiscal balance.

Answer: False

• 2. The initial stock of non-government sector wealth is invariant to the decision by government to issues bonds to match its deficit spending as against not issuing any bonds.

Answer: True

• 3. The stock of government spending continually rises when there are rising fiscal deficits.

Answer: False