The Weekend Quiz – October 21-22, 2017

Welcome to The Weekend 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 #448

  • 1. A hallmark of the neo-liberal period has been the declining share of wages in national income which in part meant that economic growth became more dependent on credit to maintain growth in consumption spending. Increasing the wage share requires a faster rate of growth in real wages in the coming years.
    • False
    • True
  • 2. In a stock-flow consistent macroeconomics, the sectoral balance stocks all sum to zero.
    • False
    • True
  • 3. Public spending can "crowd out" private spending.
    • False
    • True

Sorry, quiz 448 is now closed.

You can find the answers and discussion here

This Post Has 8 Comments

  1. On question 3 -Since a currency issuing government theoretically has the ability to purchase anything for sale in that currency, public spending by that government theoretically could purchase almost everything that is for sale and therefore leave little available for private spending no? Wouldn’t that be considered a type of ‘crowding out’?

    Thanks for the quiz.

  2. Hi Jerry,

    I came to the same conclusion. Perhaps the answer is that it does not “crowd out” but can cause inflation.

  3. Regarding question 3, isn’t inflation caused by government spending a type of “crowding out”.

    If I have a hundred dollars to spend and government spending causes prices to rise such that my hundred dollars buys a smaller basket of goods and services, have I not been crowded out of the market.

  4. Hmmm, didn\’t do so well this week – 1/3 (sucks to be me)….. On question three, I thought the point of the job guarantee was that it bid for labour that had no private bid? If the government starting offering a $50 minimum wage bid surely everyone would want to work for it and not for the private sector?

    On question 2 – I thought the sectoral balances did add to 0? 2=1+1

    On question 1 – maybe the rate of growth in real wages could be faster but still not increase the wage share. The wage share will increase when the share that goes to the capitalists decreases. Which means better unions and bargaining etc.

    Bill, I need help clearly????

  5. Very confused cause from a previous quiz:
    “Question 1:

    Modern Monetary Theory (MMT) teaches us that one of the dangers of public spending is that it can crowd out private spending.

    The answer is True.”

    Await answers with baited breath 😉

  6. Yeah Chloe, the stock/ flow things are also difficult for me at the very least. You are right on your second comment. I think. The flows sum to zero, not the stocks. But I obviously agree with you about question 3, and am awaiting the forthcoming explanation that might resolve this.

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