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 – August 18, 2012
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 questions. Your results are only known to you and no records are retained.
Quiz #178
- 1. A currency-issuing government can always ensure there is first-class services to meet the demands of an ageing population.
- False
- True
- 2. The rate the central banks charge commercial banks for any reserves it provides to them is dependent on the target policy rate the central bank sets.
- False
- True
- 3. Introducing a system of 100 per cent reserve requirements on the banks will restore the central bank's capacity to control the money supply.
- False
- True
- 4. For a nation running a small current account deficit (close to balance), the government budget will always be in deficit if the domestic private sector is spending less than it earns.
- False
- True
- 5. Premium Question: Ignoring laws to the contrary, a central bank currently targetting a 2 per cent short-term policy rate, cannot directly purchase treasury debt to facilitate the national governments budget deficit (that is, "monetise the deficit") and continue to maintain its policy rate at 2 per cent.
- False
- True
Sorry, quiz 178 is now closed.
You can find the answers and discussion here
Wonderful my second 5/5
I think these are getting too easy (or maybe I am getting too smart at MMT?).
Bill, can you post some more advanced questions in future editions?
Cheers.
In regards to number 1, why cannot a currency-issuing nation devote an expanding proportion of its real resources to servicing the needs of an aging population almost ad infinitum, even as national productivity declines? North Korea devotes an expanding portion of its “pie” to its military, even as is productive capacity dwindles overall.
My second 5/5!
For me these are hard, i perceive the Qs to be logically tricky bordering on ambiguous. Maybe ESL thing.
Timorous,
You are limited by real resources. However much you spend the services may not be “first class” if the economy is unproductive.
timorous
A country could devote 100% of its real resources to the aging population, but that would not ensure first-class services. Depends on the capacities of the real economy. Similarly, a country could devote less than 1% of it’s real resources and deliver first class services.
@pebird
I accept your logic; I also conclude by it that by devoting some particular proportion of the nation’s real resources, determined in relation to the particular capacity of the real economy of the currency-issuing nation in question, first-class services could be provided to an aging population, or to any other group in society. But, I guess I am falling into absurdity here, since at the very least what I end up talking about, I suppose, is something that has little of the features of a true monetary economy. It was a bit of a silly comment of mine to begin with — I was just trying consider an alternative answer.
About question one.
Timorous, i agree. Don’t feel silly mate. 🙂
If Australia was used as an example, we would have ample everything for the elder population. Who, after all, looked after us all when we were to young, stupid and sick to do it for our self’s! The least anyone could hope to do is afford the elderly of the nation is the very best we could offer. I’m sure all would agree.
This abundance is bound to only grow given the reality of human inventiveness and progress….and when the monolith of international banking families aren’t keeping nations in debt, using Magna Carter defying criminal usury. Is this was the RBA does? Check it out, i’m keen for any information to the contrary. 🙂
Section 51 of the Australian Constitution (http://australianpolitics.com/constitution-aus/text) allows the Parliament to use the credit of the Commonwealth for the public interest. The Trans-Australian Railway (http://en.wikipedia.org/wiki/Trans-Australian_Railway) was funded and built this way. Proving this method of credit creation is indeed with precedent and in fact adds to the overall value of the nation by boosting productivity, etc and creates a national asset.
I wish to put forward the following documentary for consideration for those interested in more historical happenings of this method of credit creation. 🙂
http://video.google.com/videoplay?docid=-515319560256183936
A rather long watch, but very informative. 🙂 enjoy!
Hope this add positively to the discussion…if a bit late.
I got 3 out of 5, btw. 1st and last wrong.