Quiz #6 answers

• The Australian (or US, for that matter) government's net spending is

Answer: unique because spending derived from private credit creation cannot add to the private sector's net worth.

Explanation: Please see Money multiplier and other myths or post a question via the comments page.

• While it is likely that the GDP (output) gap will be around 5 per cent this year, the national government's capacity to fill this gap

Answer: will be constrained by nothing but its political will.

Explanation: Please see How large should the deficit be? or post a question via the comments page.

• From the perspective of aggregate demand, creating a minimum wage private sector job

Answer: will probably have the same impact as creating a minimum wage public sector job.

Explanation: Please see Boondoggling and leaf-raking or post a question via the comments page.

• If the Government introduced a permanent Job Guarantee (offer of minimum wage job to anyone who wanted it) then

Answer: it would have no inevitable implications for future deficits or aggregate demand levels.

Explanation: Please see Boondoggling and leaf-raking or post a question via the comments page.

• The losses that the Futures Fund (or any sovereign fund) has made on its share holding

Answer: are similar in concept to any depreciating publicly-held asset and have no implications for the national government's future capacity to net spend.

Explanation: Please see The Futures Fund scandal or post a question via the comments page.