Answer: True

2. A government desires to reduce the unemployment rate over the next year and gears its macroeconomic policy to maintaining trend real GDP growth, which is 3.5 per cent per annum. If we know that labour productivity is growing at 2 per cent per annum, the labour force is growing at 1.5 per cent per annum, and the average working week is constant in hours, the government will succeed in its aim if real GDP is sustained at the trend.

Answer: False

3. If a sovereign national government runs a balanced fiscal position over the economic cycle (peak to peak), it must accept, that after all the spending adjustments are exhausted, that the private domestic balance will only be in surplus if the external balance is in surplus.

Answer: True