Quiz #620

• 1. If the annual inflation rate is greater than the growth in money wages, we can conclude that there has been a redistribution of national income towards profits because the real wage has fallen.
• False
• True
• 2. The non-government sector net wealth rises when there are government fiscal deficits, because, under current institutional practices, governments issue bonds to exactly match ($-for-$) their deficits.
• False
• True
• 3. Assume that a national is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would always find:
• A public fiscal deficit.
• A public fiscal surplus.
• Cannot tell because we don't know the scale of the private domestic sector saving as a % of GDP.

Quiz #620 answers

• 1. If the annual inflation rate is greater than the growth in money wages, we can conclude that there has been a redistribution of national income towards profits because the real wage has fallen.

Answer: False

• 2. The non-government sector net wealth rises when there are government fiscal deficits, because, under current institutional practices, governments issue bonds to exactly match ($-for-$) their deficits.

Answer: False

• 3. Assume that a national is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would always find:

Answer: A public fiscal deficit.