Saturday Quiz – May 18, 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 #217

• 1. When an external deficit and public deficit coincide, there must be a private sector deficit. This suggests that governments can only run budget deficits safely to support a private sector surplus, when net exports are strong.
• False
• True
• 2. When the private domestic sector decides to lift its saving ratio we cannot conclude that the national government has to increase its net spending (deficit) to avoid employment losses.
• False
• True
• 3. When the government pays back funds that is has borrowed from the non-government sector the payments may:
• be inflationary if the economy is growing strongly when the bonds mature and there is too much money floating about.
• be inflationary if the government payments to bond holders at maturity add more to nominal aggregate demand than the real economy can support given other policy settings.
• not be inflationary because the sovereign government just has to credit the bank accounts of those who hold the bonds to repay them.

Sorry, quiz 217 is now closed.

You can find the answers and discussion here