1. Central bankers are talking about ending their quantitative easing programs as an anti-inflationary strategy while governments are withdrawing of fiscal stimulus programs. Both policy shifts will destroy net financial assets in the non-government sector.

Answer: False

2. Australian workers found out officially this week that the real wage fell 2.7 per cent in the last 12 months. Given the growth in wages (the money you get paid) is lagging behind inflation while labour productivity is growing, then we can conclude that the profit share in GDP must be increasing.

Answer: True

3. The government is attempting to reduce the fiscal deficit. Private market orientated advisors tell them to cut government spending, whereas, the more civic-minded advisors argue that it is better to increase taxes in an equitable way than to engage in harsh spending cuts. Which policy option - a tax rate increase that will increase tax revenue at the current level of national income by $x or a spending cut of $x - will have the greater initial impact on aggregate demand?

Answer: Spending cut