Quiz #203 answers

• 1. National accounting shows us that a government surplus equals a non-government deficit. So if the imposition of fiscal austerity ends up generating a budget surpluses then the national income movements will force households and firms overall to be running deficits.

Answer: False

• 2. A characteristic feature of the neo-liberal period has been the declining share of wages in national income in most nations, which in part, meant that economic growth became more dependent on credit to maintain growth in consumption spending. However it is not necessary for real wages to grow in the coming years to reverse that trend and real wage cuts under austerity programs could result in an increase the wage share.

Answer: True

• 3. The payment of a positive interest return by the central bank on overnight bank reserves does not eliminate the need for it to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements).

Answer: True