Quiz #702
- 1. Only one of the following propositions is possible for a nation with an external deficit over any given period (with all balances expressed as a per cent of GDP): A public surplus of equal size to the external deficit, with the private domestic sector dis-saving overall. A public surplus larger than the external deficit, with the private domestic sector saving overall
- A public surplus of equal size to the external deficit, with the private domestic sector saving overall.
- A public surplus of equal size to the external deficit, with the private domestic sector dis-saving overall.
- A public surplus larger than the external deficit, with the private domestic sector saving overall
- 2. If in attempting to estimate the cyclical component of a government fiscal outcome we underestimate the potential capacity of an economy, we will conclude that the government's discretionary fiscal position is less expansionary than it actually is.
- 3. Governments concerned with their public debt ratio should encourage growth because the debt ratio always falls once economic growth resumes.
Quiz #702 answers
- 1. Only one of the following propositions is possible for a nation with an external deficit over any given period (with all balances expressed as a per cent of GDP): A public surplus of equal size to the external deficit, with the private domestic sector dis-saving overall. A public surplus larger than the external deficit, with the private domestic sector saving overall
Answer: A public surplus of equal size to the external deficit, with the private domestic sector dis-saving overall.
- 2. If in attempting to estimate the cyclical component of a government fiscal outcome we underestimate the potential capacity of an economy, we will conclude that the government's discretionary fiscal position is less expansionary than it actually is.
Answer: False
- 3. Governments concerned with their public debt ratio should encourage growth because the debt ratio always falls once economic growth resumes.
Answer: False