1. National accounting rules dictate that a national government surplus equals a non-government deficit (and vice-versa). If a national government successfully achieves a budget surplus through an austerity program then the private domestic sector must be spending more than it is earning.

Answer: False

2. The relentless push by neo-liberals to cut real wages growth has ensured the share of national income going to profits has expanded over the last 30 years in many nations.

Answer: False

3. If the stock of aggregate demand growth outstrips the capacity of the productive sector to respond by producing extra real goods and services then inflation is inevitable.

Answer: False

4. The Australian dollar has appreciated strongly against many of the key currencies over the last few years as a result of record terms of trade and the strong world demand for mining output. The appreciating dollar has significantly reduced our international competitiveness and harmed other export sectors - manufacturing and agriculture - who have not enjoyed the same buoyant world demand for their output. Export competitiveness will rise under these conditions if local workers accept a cut in nominal wages and the rate of inflation is contained.

Answer: False

5. Premium Question: Unemployment can still rise when employment growth keeps pace with labour force growth.

Answer: True

6. Special Holiday Question: The Easter Bunny thinks that banks do not need reserves to make loans. He is clearly correct and anyone, including the majority of mainstream economists and leading Op Ed writers in major city newspapers, are wrong on this point.

Answer: True