1. Imagine we forecast real GDP growth for a nation to grow by 0.8 per cent in 2021 and 1.1 per cent in 2022. We also predict that the unemployment rate would fall from 11.7 per cent in 2021 to 11.4 per cent in 2022. Additionally, average annual growth in labour productivity has been running at just over 1 per cent per annum (GDP per hours worked). If average weekly hours worked remains constant over 2022, then the implication of our forecasts is that we think the labour force of this nation in 2022 will:
Answer: shrink by 0.2 per cent.
2. If the stock of aggregate demand growth outstrips the capacity of the productive sector to respond by producing extra real goods and services then inflation is inevitable.
Answer: False
3. National accounting shows us that a government surplus equals a non-government deficit. If a government is successful in achieving a fiscal surplus then the private domestic sector will ultimately become more indebted as a consequence, which means that austerity amounts to swapping public for private debt.