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…
The Weekend Quiz – August 27-28, 2016
Welcome to The Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
Quiz #388
- 1. Assume that a nation is running an on-going external deficit of 2 per cent of GDP. If the private domestic sector successfully spends less than its income, then we would always find a public sector deficit being recorded.
- False
- True
- 2. The government has to issue debt if the central bank is targetting a non-zero policy rate and is reluctant to pay a return on excess bank reserves.
- False
- True
- 3. Assume that inflation and nominal interest rates are both constant and zero and a country has a public debt to GDP ratio of 100 per cent. The approach taken by those who support fiscal austerity is to run primary fiscal surpluses to stabilise and then reduce the debt ratio. Under the circumstances given, this strategy can still work even if the economy contracts under the burden of the surpluses.
- False
- True
Sorry, quiz 388 is now closed.
You can find the answers and discussion here
Off topic to the Friday quiz but please let me know what is going on here. On the Thursday 7:30 Report we heard the Treasurer tell us that we are running a huge deficit & consequently the interest is killing the us. Also, the deficit will run the country into a recession. Is he just lying or is there an economic theory behind his assertions. From what I know of MMT this is just plain nonsense.
Dear Rob (at 2016/08/26 at 8:14 pm)
The Treasurer is lying or parroting notes he doesn’t understand that have been written by other liars.
I will deal with this debate next week.
best wishes
bill
@Rob Holmes,
Hi Rob,
Motormouth Morrison and other neoliberals regularly try to soften up people for a TINA approach to the economy, ie There is No Alternative to cutting public programs if we are to achieve the necessary goal (not!) of budget repair.
Of course, he will likely actually induce a recession by cutting spending overall in the context of an already weak economy, rather than avert one by cutting, though much may not pass the Senate.