Quiz #686 answers

• 1. Government spending which is accompanied by a bond sale to the non-government sector adds less to aggregate demand than would be the case if there was no bond sale.

Answer: False

• 2. If the external balance is always in surplus, then the government can safely run a fiscal surplus and not impede economic growth.

Answer: False

• 3. In a stock-flow consistent macroeconomics, we have to always trace the impact of flows during a period on the relevant stocks at the end of the period. Accordingly, government and private investment spending are two examples of flows that adds to the stock of aggregate spending which in turn impacts on GDP.

Answer: False