Quiz #535 answers

• 1. Modern Monetary Theory tells us that a sovereign national government can run deficits without issuing debt. But the debt issuance allows the government to drain demand (private spending capacity) so that the public spending has more non-inflationary room to work within.

Answer: False

• 2. Workers enjoy a stable share of GDP over time if they secure wage increases in line with labour productivity.

Answer: False

• 3. The ratio of the "stock of money" (currency plus demand deposits) to bank reserves fell dramatically in the US in 2008 and been variable since that time. This phenomenon is best explained by a variable money multiplier.

Answer: False