The Weekend Quiz – December 26-27, 2020

Welcome to The Weekend Quiz – the last for 2020. 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 #615

• 1. When a government runs a continuous deficit (spending more than they are receiving in revenue), the risk is that the accumulated public spending will build up over time and cause inflation.
• False
• True
• 2. If governments allowed the automatic stabilisers built into the government balance to work counter-cyclically and avoided discretionary shifts in fiscal policy, the fiscal balance would return to its appropriate level after a cyclical disturbance.
• False
• True
• 3. If austerity led to all national governments simultaneously running public surpluses (which is the aim) then it would be impossible for all their respective private domestic sectors to save overall unless every country balanced their external positions.
• False
• True
• 4. Special Xmas Question: Santa is having trouble keeping his sled and related delivery infrastructure in working order. But he knows:
• that he is a household and will have to save, earn or borrow to generate the funds necessary for maintenance
• he has been told that the household budget is equivalent to the government fiscal balance and he understands the currency-issuing government has no financial constraints so he cannot work out why suppliers won't just accept his cheques.

Sorry, quiz 615 is now closed.

You can find the answers and discussion here