1. As long as employment growth keeps pace with labour force growth, unemployment will not rise.
Answer: False
2. Modern Monetary Theory shows that governments do not have to issue debt to match their deficit spending. However, byissuing debt, the wealth of the non-government sector immediately increases, which would not happen if the central bank just credited bank accounts on behalf of the treasury without the debt matching.
Answer: False
3. If the current account balance is running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must:
Answer: Be running a deficit equal to 1 per cent of GDP.