The Weekend Quiz – July 2-3, 2022

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 #690

  • 1. Over a given economic cycle (peak to peak), if a nation's external sector is on average balanced and the government gap between its tax revenue and spending is, on average, equal to 1 per cent of GDP, then the private domestic sector's spending-income balance will on average be in:
    • Deficit of 1 per cent of GDP
    • Surplus of 1 per cent of GDP
  • 2. Considering only the initial impact on national income (ignoring multiplier effects), fiscal austerity will have a greater negative effect on real GDP if it manifests as a spending cut of $x than if the government chose to raise a value added tax to generate $x revenue at the current level of national income.
    • False
    • True
  • 3. During a recession, the government can always restore full employment if it uses expansionary fiscal policy to restore trend real GDP growth.
    • False
    • True

Sorry, quiz 690 is now closed.

You can find the answers and discussion here

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