The Weekend Quiz – May 7-8, 2016

Welcome to The Weekend Quiz, which used to be known as the 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 #372

1. If the external sector is in deficit overall and real GDP growth rate is higher than the current real interest rate, then:

Both the private domestic sector and the government sector overall can reduce their respective net debt liabilities.
Either the private domestic sector and the government sector overall can reduce their respective net debt liabilities.
Neither the private domestic sector and the government sector overall can reduce their respective net debt liabilities.

2. The debt of a currency-issuing government with a floating exchange rate is not really a liability because the government can just continuously roll the debt over without ever having to pay it back. This is different to a household, the user of the currency, which not only has to service its debt but also has to repay them at the due date.

False
True

3. The fact that large scale quantitative easing conducted by central banks in Japan, the UK, USA and more recently, in Europe has not caused inflation provides a strong refutation of the mainstream Quantity Theory of Money, which claims that growth in the stock of money will be inflationary.