Saturday Quiz – December 13, 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 #299

• 1. If Italy, which currently faces insolvency risk on its outstanding public debt, was to leave the Eurozone, re-introduce the lira, and re-denominate all euro liabilities into the new currency, then they would eliminate that risk on all future liabilities.
• False
• True
• 2. Accumulating fiscal surpluses driven by large external surpluses in a sovereign fund allows a government more non-inflationary spending space in the future with lower taxes once the resource wealth dissipates and the external sector moves into deficit.
• False
• True
• 3. 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.
  • 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 more than they are earning.
  • A nation can run a current account deficit with a government sector surplus 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.
• (d)
• (c)
• (b)
• (a)

Sorry, quiz 299 is now closed.

You can find the answers and discussion here