The Weekend Quiz – July 24-25, 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 #645

• 1. If the external sector is in deficit overall and GDP growth rate is faster than the real interest rate, then:
• Both the private domestic sector and the government sector overall can pay down their respective debt liabilities.
• Either the private domestic sector or the government sector overall can pay down their debt liabilities.
• Neither the private domestic sector or the government sector overall can pay down their debt liabilities.
• 2. The debt of a government which issues its own currency and floats it in international markets is not really a liability because the government can just continuously roll it over without ever having to pay it back. This is different to a household, the user of the currency, which not only has to service its debt but also has to repay them at the due date.
• False
• True
• 3. The fact that large scale quantitative easing programs conducted by central banks has not caused inflation, provides a strong refutation of the mainstream Quantity Theory of Money, which claims that growth in the stock of money will be inflationary.
• False
• True

Sorry, quiz 645 is now closed.

You can find the answers and discussion here