Quiz #255 answers

• 1. An Australian trade unionist this week has argued that real wages in Australia in some industries are too high and have caused unemployment. From the perspective of Modern Monetary Theory (MMT) he is correct.

Answer: True

• 2. A government desires to reduce the unemployment rate over the next year and gears its macroeconomic policy to maintaining trend real GDP growth, which is 3 per cent per annum. If labour productivity is growing at 2 per cent per annum and the labour force is growing at 1.5 per cent per annum and the average working week is constant in hours, will the government succeed in its aim?

Answer: No

• 3. A sovereign national government can run a balanced budget over the business cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will only be in surplus if the external balance is in surplus.

Answer: True