Quiz #225 answers

• 1. A national government which runs a balanced budget over the economic cycle (peak to peak) will ensure that households and firms overall spend more than they earn - that is, run down previous savings or accumulate more net debt, once all the national spending and income adjustments are exhausted.

Answer: False

• 2. Modern Monetary Theory (MMT) teaches us that a sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues the greater is non-government wealth held in the form of public debt.

Answer: True

• 3. A basic idea in Modern Monetary Theory (MMT) is that excessive real wage demands by workers can cause mass unemployment.

Answer: True