Quiz #424 answers

• 1. The share of wages in national income in many nations has fallen significantly over the neo-liberal period which signals that the real standard of living for workers has been falling in those countries.

Answer: False

• 2. The Troika's strategy for Greece is that domestic deflation will spark an export boom and provide the capacity for the government to run primary surpluses without compromising real economic growth. Assuming Greece actually sustained positive net exports then the government could maintain a primary fiscal surplus knowing it will not compromise growth.

Answer: False

• 3. Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current interest rate target. If on average the government collects an income tax of 20 cents in the dollar, then total tax revenue will rise by 0.20 times $X if government spending increases (once and for all) by $X dollars and private investment and exports remain unchanged.

Answer: False