Saturday Quiz – June 7, 2014

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 #272

• 1. Which fiscal deficit outcome (expressed in terms of the scale relative to GDP) is the most expansionary in terms of aggregate demand?
• 1 per cent of GDP
• 2 per cent of GDP
• 3 per cent of GDP
• We need to know the structural and automatic stabiliser components before we can answer
• 2. When the government matches its deficit with debt-issuance it changes the portfolio of wealth held in the non-government sector. The impact on purchasing power is equivalent to a leakage from the expenditure system (akin to taxation, saving or imports) which reduces the expansionary impact of the government deficit spending.
• False
• True
• 3. If all national governments simultaneously manage to run public surpluses (a neo-liberal nirvana) then it would still be possible for all their respective private domestic sectors to simultaneously save overall as long as no nation ran an external deficit.
• False
• True

Sorry, quiz 272 is now closed.

You can find the answers and discussion here