Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern…
Saturday Quiz – January 31, 2015
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 #306
- 1. Although we know that a country is running a small current account deficit and that the private domestic sector is saving overall, we are unable to draw any conclusions about the state of the fiscal balance until we know the relative magnitudes of the other balances.
- False
- True
- 2. A currency-issuing government does not have to issue bonds to match its deficit spending. One of the problems of issuing debt to the non-government sector, as opposed to funding the spending via central bank credit, is that it is a form of corporate welfare because it boosts private wealth.
- False
- True
- 3. A rising fiscal surplus, which means the government is increasingly withdrawing more purchasing power from the economy than it is adding, signals that discretionary fiscal policy is contractionary (aiming to reduce total economic activity).
- False
- True
Sorry, quiz 306 is now closed.
You can find the answers and discussion here
I am puzzled about the quiz results for questions #2 and #3
To question # I answered “True”. I do consider issuing debt to the private sector to be a way of boosting their wealth. It appears that the correct answer is “False”. I am confused here.
To question #3 “A rising fiscal surplus, which means the government is increasingly withdrawing more purchasing power from the economy than it is adding, signals that discretionary fiscal policy is contractionary (aiming to reduce total economic activity).” I answered that the statement was “True”. I appears that the correct answer is “False”. I would have assumed that a fiscal surplus is contractionary; unless a trade deficit more than offsetting the Government’s contractionary policy is financing total economic activity. Is this the reason why the statement is False?
@Stuart
If I’m not mistaken the issue with #2 lies in this detail: “One of the problems of issuing debt to the non-government sector, as opposed to funding the spending via central bank credit …”
Hi Bill, off topic, but have you seen this IPPR report with a bit of a mention for Job Guarantee?
http://www.ippr.org/publications/promoting-contribution-boosting-employment-opportunity-for-all
Off topic –
Dijsselbloem: “You just killed Troika” – Varoufakis “WOW!” (video, pics)
Looks like Greece is taking up your recommendation that it stop dealing with the Troika.