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 – October 3, 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 #341
- 1. If the share in national income that workers receive (the wage share) falls then their real standard of living is reduced.
- False
- True
- 2. Government spending can crowd out private spending.
- False
- True
- 3. Suppose that the government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If the private domestic sector engaged in debt reduction which resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.
- False
- True
Sorry, quiz 341 is now closed.
You can find the answers and discussion here
2 out of 3 today … got no1 wrong
Thanks for the quiz, I always look forward to it. And to why my answers are wrong sometimes. But not today! 3 for 3!
And now, I have a totally off topic question, which I apologize for but will ask anyways. Recently Paul Krugman and Brad Delong have been blogging about why (in their opinion) bankers don’t like low interest rates. You also seemed to say that banks are not as profitable in a low interest rate scenario. But you didn’t say why that is. It seems to me that Krugman and Delong start (and finish) their analysis with banks being intermediates between savers and those who the banks lend to. And that banks have a harder time because low interest rates compress the spread between what they pay depositors and what they can charge borrowers. I am wondering if the reason banks do not like low interest rates is because when they lend, they create money, and its more profitable to charge say 8% on your created money than 4%.