Quiz #135

• 1. A sovereign national government has to tax in order to spend
• False
• True
• 2. A budget surplus indicates that the national government is seeking to slow down aggregate demand.
• False
• True
• 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.
• False
• True
• 4. To redistribute national income back to workers, nominal wages have to grow faster than inflation.
• False
• True
• 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:
• The unemployment rate will rise in the coming year by 1.5 per cent.
• The unemployment rate will fall in the coming year by 1.5 per cent.
• The unemployment rate will be unchanged.

Quiz #135 answers

• 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:

Answer: The unemployment rate will be unchanged.