Quiz #528 answers

• 1. Workers enjoy real wage increases when the rate of growth in earnings outstrips labour productivity growth.

Answer: False

• 2. Quantitative easing aims to stimulate aggregate spending by reducing long-term investment rates whereas fiscal deficit stimulate aggregate spending via tax cuts or direct public spending. Both policies ultimately work by increasing the net financial assets held by the non-government sector.

Answer: False

• 3. An understanding of Modern Monetary Theory (MMT) leads to the conclusion that a central bank could still increase interest rates even if the government instructed it to directly purchase treasury debt as an accompanying operation to the governments fiscal deficit.

Answer: True