Saturday Quiz – May 11, 2013

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 #216

• 1. The crucial difference between a monetary system based on the convertible currency (gold standard) model and a fiat currency monetary is that under the former system:
• Excessive national government spending led to inflation.
• The national government had to issue debt to cover spending above taxation.
• The national government could not use net spending to achieve full employment.
• 1. Bank reserves are maintained to ensure that all the cheques written every day clear when presented. If a bank doesn't have enough reserves then cheques drawn against it will bounce.
• True
• False
• 3. Assume inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting. Iff government spending increases by $X dollars and private investment and exports are unchanged then nominal income will continue growing until the sum of the changes in taxation revenue, import spending and household saving equals $X dollars.
• True
• False

Sorry, quiz 216 is now closed.

You can find the answers and discussion here