Quiz #515 answers

• 1. A government can run a balanced fiscal position over a complete economic cycle (peak to peak) as long as it accepts, that after all the spending and income adjustments are exhausted, that over the same cycle, the private domestic balance will only be in surplus if the external balance is in surplus.

Answer: True

• 2. A basic understanding of Modern Monetary Theory (MMT) would leave you to conclude that excessive real wage demands by workers can cause unemployment.

Answer: True

• 3. Assume that a nation's GDP growth is half a percentage point below its trend rate of growth of 3.5 per cent per annum and labour productivity grows at 1.5 per cent per annum. If average working week is constant in hours and the labour force grows at 2 per cent per annum, then we would observe a rising unemployment rate.

Answer: True