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 – October 6-7, 2018
Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.
Quiz #498
- 1. The ECB has announced that it will taper its quantitative easing over the next few months. The steady decline in purchases of government bonds from the non-government sector will reduce the growth of net financial assets in that sector.
- False
- True
- 2. The immediate change in the net worth of the non-government sector when the government increases its net spending is invariant to government issuing debt which exactly matches ($-for-$) the increase in net public spending.
- False
- True
- 3. A rising government deficit will always allow the private domestic sector to increase its overall saving in nominal terms.
- False
- True
Sorry, quiz 498 is now closed.
You can find the answers and discussion here
Three out of three! This weeks quiz wasn’t as hard as last week. Had to look up “invariant” again though.
OMG 3/3 this week!
My slight query for number 1 is when QE tapers off, yields in theory go up and bond prices fall – does that reduce the value of the assets held and hence the growth in the value of the net financial assets – so a bond worth x during QE is now worth less than x?
I understand that just because the ECB isn’t buying them anymore that doesn’t mean governments won’t be issuing them when they deficit spend.
I misread question 2. I’ll go look up “invariant” in the dictionary now!