Saturday Quiz – October 11, 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 #290

• 1. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP) - a nation can run a current account deficit accompanied by a government sector surplus:
• of equal proportion to GDP, while the private domestic sector is spending less than they are earning.
• of equal proportion to GDP, while the private domestic sector is spending more than they are earning.
• that is larger, while the private domestic sector is spending less than they are earning.
• None of the above are possible as they all defy the sectoral balances accounting identity.
• 2. The total stock of public debt as a percentage of Gross Domestic Product (the so-called public debt ratio) is of no concern because it falls once economic growth resumes.
• False
• True
• 3. The expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance compared to a situation when it issued no debt.
• False
• True

Sorry, quiz 290 is now closed.

You can find the answers and discussion here