Quiz #485

• 1. Modern Monetary Theory (MMT) recognises that the unemployed live of the hard work of those that are employed.
• False
• True
• 2. The accumulated spending build-up of annual fiscal deficits does not pose an inflation threat.
• False
• True
• 3. Which scenario represents a more expansionary outcome: (a) A fiscal deficit equivalent to 5 per cent of GDP (including the impact of automatic stabilisers equivalent to 3 per cent of GDP). (b) A fiscal deficit equivalent to 3 per cent of GDP. (c) You cannot tell because you do not know the decomposition between the cyclical and structural components in Option (b)
• Option (a)
• Option (b)
• Option (c)

Quiz #485 answers

• 1. Modern Monetary Theory (MMT) recognises that the unemployed live of the hard work of those that are employed.

Answer: True

• 2. The accumulated spending build-up of annual fiscal deficits does not pose an inflation threat.

Answer: False

• 3. Which scenario represents a more expansionary outcome: (a) A fiscal deficit equivalent to 5 per cent of GDP (including the impact of automatic stabilisers equivalent to 3 per cent of GDP). (b) A fiscal deficit equivalent to 3 per cent of GDP. (c) You cannot tell because you do not know the decomposition between the cyclical and structural components in Option (b)

Answer: Option (a)