Quiz #29

• 1. In a fiat monetary system, national government spending is not revenue constrained. But there are also circumstances when the non-government sector spending is similarly not constrained by available revenue. An example is if the local lunch shop where I go every day allows me to take my sandwiches before I go to the bank to get some cash.
• True
• False
• 2. Samuel Brittain wrote "If we dont, it wont and wont need to " in a recent column. He was referring to the fact that if the UK economy grows then the automatic stabilisers will reduce the budget deficit, but if growth is not forthcoming, then the deficit will not contract automatically and that should be welcomed.
• True
• False
• 3. A fundamental understanding that you can draw from modern monetary theory is that if there is mass unemployment and real wage cuts reduce the non-government desire to save in the currency of issue then an employment-creating policy would be to target real wage cuts.
• False
• True
• 4. Modern monetary theory tells us that while asset bubbles that drive private sector debt beyond sustainable levels are disruptive, there should be no reason for GDP and employment growth to turn negative.
• False
• True
• 5. A nation could successfully sustain a fiscal strategy that closed the spending gap left by non-government net saving at all times, irrespective of what other nations were doing.
• False
• True