1. A sovereign national government has to tax in order to spend
Answer: True
2. A budget surplus indicates that the national government is seeking to slow down aggregate demand.
Answer: False
3. When the external sector is contributing to growth, the government can safely pursue a surplus even if private domestic sector desires to spend less than they earn.
Answer: False
4. To redistribute national income back to workers, nominal wages have to grow faster than inflation.
Answer: False
5. Premium Question: Assume that a nation's real GDP growth rate over the next year is 3 per cent and labour productivity grows at 1.5 per cent over the same period. If the the labour force maintains a growth rate of 1.5 per cent per annum and the average working week is constant in hours, then: