Saturday Quiz – December 14, 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 #247

• 1. If workers cannot maintain nominal wages growth equal to the growth in labour productivity, then their real wages fall.
• False
• True
• 2. Assume the central bank keeps the inflation rate steady and equal to the nominal interest rate. Under these monetary conditions, a government can push the primary budget balance into surplus and drive down the public debt ratio even if the fiscal austerity causes a recession.
• False
• True
• 3. Suppose a government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.
• False
• True

Sorry, quiz 247 is now closed.

You can find the answers and discussion here