The Weekend Quiz – March 27-28, 2021

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 #628

• 1. Start from a situation where the external surplus is the equivalent of 2 per cent of GDP and the fiscal surplus is 2 per cent. If the fiscal balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then:
• National income rises and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.
• National income remains unchanged and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.
• National income falls and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.
• National income rises and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP.
• National income remains unchanged and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP.
• National income falls and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP.
• 2. A rising fiscal deficit indicates that discretionary fiscal policy is expansionary.
• False
• True
• 3. Matching government deficit spending with bond issues is less expansionary than if the government instructed the central bank to buy its bonds to match the deficit.
• False
• True

Sorry, quiz 628 is now closed.

You can find the answers and discussion here