Quiz #173 answers

• 1. The OECD reported this week that the wage share in national income has continued to fall in Australia during the crisis. This has arisen because the purchasing power equivalent of wages and salaries has failed to keep pace with the growth in labour productivity.

Answer: True

• 2. The ratio of the broad measure of the money supply to the monetary base has fallen dramatically in many nations during the financial crisis which indicates that the money multiplier has fallen.

Answer: False

• 3. If a government doesn't raise tax revenue then it is unable to spend.

Answer: True

• 4. At present, it appears that the automatic stabilizers are probably providing enough demand stimulus to maintain some growth in most economies. While the proportion of the budget balance that is working in this way is not directly observable, the estimates provided by institutions such as the OECD and the IMF are overly pessimistic.

Answer: True

• 5. Premium Question: Under current public sector debt-issuance arrangements (where sovereign governments match their deficits with issues of debt), the government and the private domestic sector cannot simultaneously spend less than they earn.

Answer: False