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The Net Operating Balance
The Primary Net Operating Balance
Net Lending/Borrowing
The Net Acquisition of Nonfinancial Assets
The cyclically adjusted NOB
-50
25
45
-45
GRADED QUESTION 3.11 (1 point possible)
Which of the following balances estimates the actual fiscal position by eliminating the effect of the economic cycle from
revenue and expense?
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GRADED QUESTION 3.12 (1 point possible)
Consider a government in which the main results are (this was an example followed during one of the video lectures):
NOB = 50, NLB = -25, increase in financial assets (subsidized agricultural loans) = 20.
Therefore we can conclude that government debt should be increasing by how much?
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GRADED QUESTION 3.13 (1 point possible)
In mid-February 2013, Fiscalia announced the outturns for 2012. Compared to 2011, the General Governments NOB improved
from -1.5% of GDP to -0.5% of GDP, while Net Borrowing (negative balance on NLB) fell from 4% to 1%. The Finance Minister
shortly thereafter gave a speech in which he attributed these developments to notable improvements in fiscal policy, as the
government had made decisive efforts to put its debt position on a more sustainable path.
You observe that the improvements in these balances are undeniable, but are not convinced that these were exclusively the
result of policy actions. Indicate which of the following non-policy factors could explain the improved outturns. (Check all
that apply.)
IMFx: FPP.1x Financial Programming and Policies, Part 1: Macroeconomic Accounts & Anal
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Interest expenses fell as a result of significant monetary easing.
The government postponed paying interest obligations due in 2012, thereby lowering expenses.
The economy was booming in 2012, with a widening positive output gap. Therefore, revenues
increased even though no new tax measure was implemented.
The booming economy caused an increase in expenses and a reduction in revenues.
Public investment increased by 2 percentage points of GDP.
Privatization of a public bank for export promotion for which the proceeds were 2 percentage
points of GDP.
Other types of fixed asset sales amounting to 2 percentage points of GDP.
Major upward revision of the rate of depreciation of fixed capital.
Gross operating balance
Overall balance
Cyclically adjusted primary overall balance
Net lending/borrowing
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GRADED QUESTION 3.14 (1 point possible)
Note that, in the previous question, the improvement in NLB (3 percentage points of GDP) is greater than that in the NOB (1
percentage point of GDP). Indicate which of the following could explain this difference.
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GRADED QUESTION 3.15 (1 point possible)
Continuing with the example of the previous two questions, in order to be convinced that a policy-driven (and lasting) fiscal
adjustment did in fact take place, what single balance would give you the greatest assurance?
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