The Weekend Quiz – October 22-23, 2022 – Bill Mitchell – Modern Monetary Theory

5. If you observed the following conditions, which would be consistent with a stable GDP level?

(a) The government deficit is $10 (spending greater than tax revenue), household saving is $20, Import expenditure is $20, total investment expenditure is $20 and export sales equal $10. The unemployment rate is 10 per cent.
(b) The government deficit is $15 (spending greater than tax revenue), household saving is $20, Import expenditure is $20, total investment expenditure is $15 and export sales equal $15. The unemployment rate is 5 per cent.
(c) The government deficit is $10 (spending greater than tax revenue), household saving is $15, Import expenditure is $20, total investment expenditure is $10 and export sales equal $10. The unemployment rate is 12 per cent.
(d) The government deficit is $10 (spending greater than tax revenue), household saving is $20, Import expenditure is $20, total investment expenditure is $20 and export sales equal $15. The unemployment rate is 10 per cent.