Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern…
Saturday Quiz – February 26, 2011
Welcome to the billy blog Saturday quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following six questions. Your results are only known to you and no records are retained.
Quiz #101
- 1. A Fiscal Risk index which measures the vulnerability of a nation to public debt default is never applicable to a national government which issues its own floating currency.
- False
- True
- 2. The central bank cannot directly purchase treasury debt to facilitate the national governments budget deficit (that is, "monetise the deficit") if it targets a positive short-term policy rate.
- False
- True
- 3. Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the difference between government spending and tax revenue (the "primary deficit") plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP.
- False
- True
- 4. 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
- 5. Premium question: Quantitative easing and an expansion of net public spending both add net financial assets to the non-government sector but the former aims to stimulate demand by lowering interest rates while the latter policy choice more directly adds demand to the system.
- False
- True
Sorry, quiz 101 is now closed.
You can find the answers and discussion here
If the reasoning for FALSE being the correct answer to question 1 is that a voluntary choice to self-destruct can always be made, I’m giving myself an extra point.
I haven’t bee whorl keep up with your posts lately. I tried to predict what your answers would be and successfully got zero out of five! Must go and read this weeks articles in my read-it-later queue.
I’ve been thinking that we need a jubillee of some kind to get us out of the mess we’re in. I was wondering what people here thought of that idea?
iPad fingers, sorry. Bee whorl => been able to
Taking the quiz before going to class is unwise. So I have learned. So it is. 🙂 2 out of 5 isn’t terrible for (semi-educated) guessing, though. Is it?
Brian @ 11:57
“2 out of 5 isn’t terrible…”
You should be so lucky !
The trick is in positively reframing the negative experience.
What doesn’t kill you etc
Methinks Bill is training up an army of hardened cardres.
Or the non “card carrying variety”: cadres.
No Andy, I think the reason its false, (and I almost put false because of this but didnt) is because a sovereign currency issuer can still get into trouble IF they have some debts denominated in someone elses currency.