Quiz #444 answers

• 1. If the inflation rate is steady and the central bank maintains a constant nominal interest rate, then the public debt ratio will rise if the government deficit doubles (say, from 2 to 4 per cent of GDP) although Modern Monetary Theory would not place any special importance in that increase.

Answer: False

• 2. Progressives have pointed out the slow or non-existent growth in real wages over the last decades. What they demand is that the rate of growth in earnings is faster than the growth in labour productivity. Is this sufficient to achieve their aim of real wages growth?

Answer: No

• 3. A fiscal surplus may not suggest that the national government is trying to slow the economy down and contain inflation.

Answer: True