Saturday Quiz – March 21, 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 #313

  • 1. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):
    • None of the above are possible as they all defy the sectoral balances accounting identity.
    • 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.
    • 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 accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.
  • 2. One possible problem with running continuous budget deficits is that the spending builds up over time and with inflation eventually becoming the risk that has to be managed.
    • False
    • True
  • 3. If employment growth matches the pace of growth in the civilian population (people above 15 years of age) then the economy will experience a constant unemployment rate as long as participation rates do not change.
    • False
    • True

Sorry, quiz 313 is now closed.

You can find the answers and discussion here

This Post Has 2 Comments

  1. Bill,
    In Q3 “unemployment RATE” is ambiguous. If it is understood as a percentage of the working age population then the rate will keep falling. e.g start with a hundred people and 5 unemployed (unemployment is 5%). If 10 people are added and ten jobs as well, we now have 5 people unemployed (still) but now out of 110, which is less than 5 per cent.
    Or have I misunderstood something? I must confess I often get things wrong because I misunderstand some terminology or phrase.

  2. Dear totaram (at 2015/03/22 at 15:50)

    Q3 is definitely not ambiguous. The unemployment rate is always defined as the percentage of the labour force that is not in employment.

    best wishes
    bill

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