Quiz #405

• 1. A national, currency-issuing government that runs a balanced fiscal outcome (spending equals revenue) over the economic cycle (peak to peak) also has to accept that, after all the spending adjustments are exhausted, their strategy will ensure that households and firms overall spend more than they earn - that is, run down previous savings or accumulate more net debt.
• False
• True
• 2. A basic understanding of Modern Monetary Theory (MMT) would argue that mass unemployment is due to a deficiency in aggregate spending which would then lead one to reject the conclusion that excessive real wage demands by workers can cause such unemployment.
• False
• True
• 3. 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 less is the volume of investment funds available to the non-government sector.
• The greater is non-government wealth held in the form of public debt.
• The more difficult it is for banks to attract deposits to initiate loans from.
• All of the above.
• 4. Which picture best describes Santa heading out on Xmas Day to hand out presents?
  
  Option A:
  
  
  Option B:
• A. Cold Santa
• B. Hot Santa

Quiz #405 answers

• 1. A national, currency-issuing government that runs a balanced fiscal outcome (spending equals revenue) over the economic cycle (peak to peak) also has to accept that, after all the spending adjustments are exhausted, their strategy will ensure that households and firms overall spend more than they earn - that is, run down previous savings or accumulate more net debt.

Answer: False

• 2. A basic understanding of Modern Monetary Theory (MMT) would argue that mass unemployment is due to a deficiency in aggregate spending which would then lead one to reject the conclusion that excessive real wage demands by workers can cause such unemployment.

Answer: False

• 3. 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:

Answer: The greater is non-government wealth held in the form of public debt.

• 4. Which picture best describes Santa heading out on Xmas Day to hand out presents?
  
  Option A:
  
  
  Option B:

Answer: B. Hot Santa