Quiz #641

• 1. The debate about creating a European-wide bond has been motivated by the desire to prevent sovereign defaults among member countries who are having trouble covering their net spending positions with market-sourced finance. The solvency risk is however sourced in the restrictions imposed on deficit and debt ratios by the Stability and Growth Pact which member states voluntarily agreed to.
• False
• True
• 2. If the monthly Labour Force data shows that employment grew by 400 in net terms over the last month, unemployment rose by 10,700, and the participation rate fell by 0.1 points then we can conclude that:
• The labour force grew faster than employment but you cannot tell what happened to the working age population from the information provided.
• The labour force grew faster than employment but not as fast the working age population.
• The working age population grew faster than employment and offset the decline in the labour force arising from the drop in the participation rate.
• 3. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.
• False
• True

Quiz #641 answers

• 1. The debate about creating a European-wide bond has been motivated by the desire to prevent sovereign defaults among member countries who are having trouble covering their net spending positions with market-sourced finance. The solvency risk is however sourced in the restrictions imposed on deficit and debt ratios by the Stability and Growth Pact which member states voluntarily agreed to.

Answer: False

• 2. If the monthly Labour Force data shows that employment grew by 400 in net terms over the last month, unemployment rose by 10,700, and the participation rate fell by 0.1 points then we can conclude that:

Answer: The labour force grew faster than employment but not as fast the working age population.

• 3. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.

Answer: False