Quiz #693
- 1. When economic growth resumes, the automatic stabilisers work to reduce government spending and increase taxes, which ensures that the government fiscal balance returns to its appropriate level.
- 2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):
- A nation can run a external deficit accompanied by a government sector surplus of equal size, while the private domestic sector is spending less than they are earning.
- A nation can run a external deficit accompanied by a government sector surplus of equal size, while the private domestic sector is spending more than they are earning.
- A nation can run a external deficit accompanied by a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.
- None of the above are possible as they all defy the sectoral balances accounting identity.
- 3. Broad money is a multiple of the monetary base which is what the money multiplier concept explains.