Quiz #348 answers

• 1. Assume that the current account deficit of a nation is on average over the business cycle equal to 2 per cent of GDP and that the government manages to run a balanced fiscal position when averaged over the same cycle. We can conclude that on average the private domestic sector overall is spending more than it is earning.

Answer: True

• 2. Trade unions that manage to push aggregate wages growth ahead of the inflation rate will ensure that workers gain a greater share of national income.

Answer: False

• 3. 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, then real GDP growth must be greater than 3.5 per cent per annum or unemployment will rise.

Answer: False