The Weekend Quiz – April 27-28, 2019

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 #527

• 1. The Australian Treasury equates the Non-Accelerating Inflation Rate of Unemployment (NAIRU) with full employment and uses this to calibrate their structural deficit estimates. Accordingly, the structural deficits reported will typically be:
• biased downwards, indicating, that at any point in the business cycle, that the government fiscal stance is less expansionary than it actually is.
• biased upwards, indicating, that at any point in the business cycle, that the government fiscal stance is more expansionary than it actually is.
• difficult to assess because the Treasury forward estimates are subject to forecasting inaccuracy.
• 2. In a fiat monetary system, the absence of currency convertibility means:
• there is no reason for people to hold currency as a hedge against gold price falls.
• that the currency is only convertible into government bonds rather than gold.
• that the government can motivate people to exchange goods and services in return for public spending by fining anyone of working age who walks down the street.
• 3. When a sovereign government issues debt it logically:
• increases the assets that are held by the non-government sector $-for-$.
• has no impact on the overall holdings of assets held by the non-government sector $-for-$
• reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.

Sorry, quiz 527 is now closed.

You can find the answers and discussion here