Quiz #713

• 1. Widening the tax base provides the government with more capacity to spend.
• False
• True
• 2. If there is an external deficit, and the private domestic sector successfully increases its overall saving as a percentage of GDP, then income adjustments will always ensure the government fiscal balance is in deficit.
• False
• True
• 3. Estimates of structural fiscal deficits published the multilateral agencies such as the IMF and the OECD are to be treated with suspicion because they are based on excessively optimistic estimates of potential GDP.
• False
• True
• 4. Special Xmas Question: Santa is having trouble keeping his sled and related delivery infrastructure in working order. But:
• He know he runs a household and will have to save, earn more or borrow to generate the funds necessary for maintenance.
• He has been told that the household budget is equivalent to the government fiscal balance and he understands the currency-issuing government has no financial constraints so he cannot work out why suppliers won't just accept his cheques.