Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern…
Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.
- 1. If workers desire real wage gains then they must maintain nominal wages growth equal to the growth in labour productivity.
- 2. Assume the central bank keeps the inflation rate steady and equal to the nominal interest rate. Under these monetary conditions, a government can push the primary fiscal balance into surplus and drive down the public debt ratio even if the fiscal austerity causes a recession.
- 3. Suppose a government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private domestic sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.
Sorry, quiz 701 is now closed.
You can find the answers and discussion here