The Weekend Quiz – November 11-12, 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 #451

• 1. Assuming the expenditure multiplier is greater than 1, deficit spending will have a greater impact on aggregate demand if there are no offsetting monetary operations by the central bank (government bond sales) draining the excess reserves created.
• False
• True
• 2. If the government succeeds in reducing its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.
• False
• True
• 3. Which fiscal deficit is the most expansionary?
• 1 per cent of GDP
• 2 per cent of GDP
• 3 per cent of GDP
• Cannot say because it depends on the decomposition of the structural and cyclical components.

Sorry, quiz 451 is now closed.

You can find the answers and discussion here