Quiz #5

• In February 2009, the unemployment rate was 5.7 per cent. If over the next 12 months GDP growth is -1 per cent (as expected), and the labour force growth slows to 1.6 per cent per annum and labour productivity growth is a flat 0.5 per cent per annum, then we would expect the unemployment in February 2010 to be approximately
• 6.8 per cent.
• 7.8 per cent
• 8.8 per cent
• Norway has a lower unemployment rate than Australia
• because its public sector is larger.
• because it consistently maintains a smaller gap between aggregate demand and potential output.
• because it has a smaller population and thus has to generate fewer jobs overall.
• Aiming at some budget deficit target (as outlined in the Government's Updated Economic and Fiscal Outlook for the 2008-09 Federal Budget) is futile because
• national government should maintain full employment.
• the automatic stabilisers are driven by private economic decisions.
• the national government can always finance its own spending.
• The rising budget deficit will only become a problem
• it will never be a problem because the national government is sovereign in its own currency.
• if it exceeds the non-government sector's nominal desire to save in the currency of issue.
• if the non-government sector eventually stops buying the debt that the Government is issuing.
• The latest data shows that Australians have on average lost more than 12 per cent of their real wealth in the last year as a result of the GFC. This means
• that it will be neither harder or easier for the country as a whole to provide health care to our ageing population in the future.
• that it will harder for the country as a whole to provide health care to our ageing population in the future only if the wealth doesn't grow again.
• that it will harder for the country as a whole to provide health care to our ageing population in the future.

Quiz #5 answers

• In February 2009, the unemployment rate was 5.7 per cent. If over the next 12 months GDP growth is -1 per cent (as expected), and the labour force growth slows to 1.6 per cent per annum and labour productivity growth is a flat 0.5 per cent per annum, then we would expect the unemployment in February 2010 to be approximately

Answer: 8.8 per cent

Explanation: Please see Time to get real its bad! or post a question via the Comments.

• Norway has a lower unemployment rate than Australia

Answer: because it consistently maintains a smaller gap between aggregate demand and potential output.

Explanation: Please see Norway colder than us but for further details or post a question via the Comments.

• Aiming at some budget deficit target (as outlined in the Government's Updated Economic and Fiscal Outlook for the 2008-09 Federal Budget) is futile because

Answer: the automatic stabilisers are driven by private economic decisions.

Explanation: Please see The green shoots of recovery been looking! for further details or post a question via the Comments.

• The rising budget deficit will only become a problem

Answer: if it exceeds the non-government sector's nominal desire to save in the currency of issue.

Explanation: Please see Size of Deficit 101 for further details or post a question via the Comments.

• The latest data shows that Australians have on average lost more than 12 per cent of their real wealth in the last year as a result of the GFC. This means

Answer: that it will be neither harder or easier for the country as a whole to provide health care to our ageing population in the future.

Explanation: Please see Social security insolvency 101 for further details or post a question via the Comments.