[ {"ID":"1","name":"The billy blog Saturday Quiz 1","added_on":"2009-03-21 20:53:38","questions":[{"question":"Quantitative easing","ID":"1","explanation":"Quantitative easing is when the central bank buys one type of financial asset (private holdings of bonds, company paper) in return for another asset (reserve balances at the central bank). The net financial assets in the private sector are in fact unchanged although the portfolio composition of those assets is altered (maturity substitution) which changes yields and returns. Quantitative easing increases central bank demand for \"long maturity\" assets held in the private sector which reduces interest rates at the longer end of the yield curve. These are traditionally thought of as the investment rates. This might increase aggregate demand given the cost of investment funds is likely to drop. But on the other hand, the lower rates reduce the interest-income of savers who will reduce consumption (demand) accordingly.","answers":[{"ID":"36","answer":"is when the central bank purchases investment maturity bonds in return for bank reserves and involves no change in the net financial assets of the non-government sector.","correct":"1"},{"ID":"35","answer":"is when the central bank floods the banks with new money (new net financial assets) to encourage them to lend in order to ease the credit crunch","correct":"0"},{"ID":"34","answer":"involves the central bank printing new money and is thus the same as government spending which is not financed by debt","correct":"0"}]},{"question":"Bonds have to be issued by the national governments","ID":"2","explanation":"Please read Deficit spending 101 - Part 3 if you are still wondering why!","answers":[{"ID":"39","answer":"if taxation revenue falls in a recession and the government wants to introduce a stimulus package.","correct":"0"},{"ID":"38","answer":"if the central bank desires to maintain a constant short-term target interest rate and net government spending is rising. (note comments)","correct":"1"},{"ID":"37","answer":"to finance the budget deficit if the government is worried about \"money creation\".","correct":"0"}]},{"question":"Budget deficits ","ID":"3","explanation":"Please see Deficit spending 101 - Part 3 if you are still wondering why the correct answer is one.","answers":[{"ID":"7","answer":"put downward pressure on short-term interest rates because they increase bank reserves in aggregate which then stimulate competition in the Interbank market.","correct":"1"},{"ID":"8","answer":"put upward pressure on interest rates because the government is competing for scarce savings that could be invested elsewhere.","correct":"0"},{"ID":"9","answer":"have no implications for interest rates because the ratings agencies basically set the risk rating of public debt.","correct":"0"}]},{"question":"Budget surpluses","ID":"4","explanation":"Please see Deficit spending 101 - Part 1 if you are still wondering why the correct answer is two.nnFurther, when the government is building a sovereign fund by purchasing financial assets in the open markets it is spending. So it is a myth to say they \"used\" the surplus up to buy the assets.","answers":[{"ID":"18","answer":"allow the Federal government to build sovereign funds which then help it solve problems in the future.","correct":"0"},{"ID":"17","answer":"undermine private wealth and are mirrored $-for-$ in non-government dis-saving.","correct":"1"},{"ID":"16","answer":"assist the economy to save when activity levels are high.","correct":"0"}]},{"question":"Federal government budget deficits","ID":"5","explanation":"Please see Deficit spending 101 - Part 1 if you are still wondering why the correct answer is three.","answers":[{"ID":"32","answer":"are good during recessions because provide direct stimulus to the spending stream and finance private savings.","correct":"1"},{"ID":"31","answer":"are good during recessions because they put money into bank reserves in exchange for longer-maturing bonds.","correct":"0"},{"ID":"33","answer":"are good during recessions but need to be increased with caution because they increase the public borrowing requirement.","correct":"0"},{"ID":"30","answer":"are good during recessions but ultimately require higher taxation in the future to bring the budget back towards balance.","correct":"0"}]}]}, {"ID":"2","name":"The billy blog Saturday Quiz 2","added_on":"2009-03-27 17:38:55","questions":[{"question":"Hours-based measures of labour underutilisation will always be higher than person-based measures","ID":"6","explanation":"Please consult the blog Labour market tanking for more information.","answers":[{"ID":"56","answer":"if the unemployment rate rises.","correct":"0"},{"ID":"55","answer":"if the unemployed want part-time work only.","correct":"0"},{"ID":"57","answer":"if there is underemployment.","correct":"1"}]},{"question":"While budget surpluses withdraw private sector purchasing power","ID":"7","explanation":"Please see the blog Budget surpluses are not saving for further information.","answers":[{"ID":"59","answer":"they also undermine the overall capacity to save.","correct":"1"},{"ID":"58","answer":"they do help the economy save income.","correct":"0"},{"ID":"60","answer":"they help keep interest rates down.","correct":"0"}]},{"question":"The federal budget deficit can be excessive","ID":"8","explanation":"Please see the blog Size of deficit 101 for further information.","answers":[{"ID":"46","answer":"if household savings are not used efficiently.","correct":"0"},{"ID":"47","answer":"if investors cannot get funds to build productive infrastructure.","correct":"0"},{"ID":"48","answer":"if the net government spending exceeds the private desire to save.","correct":"1"}]},{"question":"The US government"s latest plan (the Public-Private Investment Program) will","ID":"9","explanation":"Please see the blog US detox lunacy for further information.","answers":[{"ID":"66","answer":"will not impede the capacity of the US Government to create full employment.","correct":"1"},{"ID":"65","answer":"undermine the capacity of fiscal policy to stimulate demand because it is using public funds which could be used elsewhere.","correct":"0"},{"ID":"64","answer":"help stabilise the economy because it will clear out all the toxic assets in the private banks.","correct":"0"}]},{"question":"The current trend to increasing budget deficits","ID":"10","explanation":"Please see the blog Size of deficit 101 for further information.","answers":[{"ID":"52","answer":"will burden future generations if it fails to generate real growth in employment and national income.","correct":"1"},{"ID":"53","answer":"will burden future generations only if the government has to pay back the debt.","correct":"0"},{"ID":"54","answer":"will help future generations if it is also accompanied by quantitative easing which eases the debt burden.","correct":"0"}]}]}, {"ID":"3","name":"The billy blog Saturday Quiz 3","added_on":"2009-04-02 19:16:30","questions":[{"question":"The only essential requirement for a sovereign currency is","ID":"11","explanation":"Go to Koala Notes currency for more information.","answers":[{"ID":"94","answer":"that it is accepted as a means of exchange.","correct":"0"},{"ID":"95","answer":"that it is the only unit in which tax obligations to the government can be extinguished.","correct":"1"},{"ID":"96","answer":"that it possesses intrinsic value which attracts people to demand it.","correct":"0"}]},{"question":"If the national government has been paying off debt","ID":"12","explanation":"Go to On things nautical for more information.","answers":[{"ID":"78","answer":"its capacity to expand the economy should a recession arise is unaltered.","correct":"1"},{"ID":"77","answer":"it has less capacity to expand the economy should a recession arise.","correct":"0"},{"ID":"76","answer":"it has more capacity to expand the economy should a recession arise.","correct":"0"}]},{"question":"Taxation functions","ID":"13","explanation":"Go to A simple business card economy for more information.","answers":[{"ID":"82","answer":"to create sellers of real goods and services, so that the government can spend its otherwise worthless currency. ","correct":"1"},{"ID":"83","answer":"to ensure the government has enough cash to fulfill its electoral mandate.","correct":"0"},{"ID":"84","answer":"to allow the government to run a budget surplus to provide for the future needs of the society.","correct":"0"}]},{"question":"The federal stimulus package will fail ","ID":"14","explanation":"Go to More journalistic nonsense! for further information.","answers":[{"ID":"85","answer":"if it requires so much debt to be issued that it scares global financial markets.","correct":"0"},{"ID":"86","answer":"if it goes into the hands of people who merely save it.","correct":"1"},{"ID":"87","answer":"if it increases imports faster than exports.","correct":"0"}]},{"question":"Trade unions who advocate shorter hours (work sharing) as a national solution to rising unemployment","ID":"15","explanation":"Go to Shorter hours or layoffs? for further information.","answers":[{"ID":"88","answer":"should be applauded for their willingness to compromise which will also lessen the deficit stimulus that is required.","correct":"0"},{"ID":"89","answer":"are working against their members interests unless the workers total incomes are maintained and they persuade the government to run deficits sufficient to fill the spending gap.","correct":"1"},{"ID":"90","answer":"should be arguing for layoffs because they hurt less people and would lessen the deficit stimulus required.","correct":"0"}]}]}, {"ID":"4","name":"The billy blog Saturday Quiz 4","added_on":"2009-04-06 17:17:31","questions":[{"question":"If the unemployment rate is rising it means","ID":"16","explanation":"You might like to read for further information or request an explanation via the comments.","answers":[{"ID":"127","answer":"that there are more people without jobs than in the previous period.","correct":"0"},{"ID":"126","answer":"as a percentage of the available labour force more people are without jobs.","correct":"1"},{"ID":"125","answer":"that there are fewer jobs available than in the previous period.","correct":"0"}]},{"question":"The comment that budget deficits lead to higher taxation is","ID":"17","explanation":"You might like to read for further information or request an explanation via the comments.","answers":[{"ID":"120","answer":"generally false because in the case of sovereign governments because they do not need to raise taxes to finance spending.","correct":"0"},{"ID":"121","answer":"generally true because revenue has to be raised ultimately to pay for the deficit spending and that requires individual tax burdens to rise.","correct":"0"},{"ID":"119","answer":"generally true if the deficit stimulates output but doesn"t mean current individual tax burdens are higher.","correct":"1"}]},{"question":"Even though a sovereign government doesn"t have to \"finance\" its spending, if it issues debt to the private sector","ID":"18","explanation":"You might like to read for further information or request an explanation via the comments.","answers":[{"ID":"103","answer":"it will push up interest rates because there is only a finite amount of savings available at any time to buy the bonds.","correct":"0"},{"ID":"104","answer":"it will not push up interest rates because budget deficits put downward pressure on rates and bond sales just maintain them at their previous rate.","correct":"0"},{"ID":"105","answer":"it will push up interest rates if the government makes a decision that they should be higher either through direct central bank intervention or through voluntary debt issuing arrangements that allow this.","correct":"1"}]},{"question":"When the government borrows from the non-government sector it eventually has to pay the bonds back on maturity. This will","ID":"19","explanation":"You might like to read for further information or request an explanation via the comments.","answers":[{"ID":"113","answer":"be inflationary if the government payments to bond holders at maturity add more to nominal aggregate demand than the real economy can support given other policy settings.","correct":"1"},{"ID":"114","answer":"be inflationary if by the time the bonds mature the economy is growing strongly so there will be too much money floating about.","correct":"0"},{"ID":"115","answer":"not be inflationary because the sovereign government just has to credit the bank accounts of those who hold the bonds to repay them.","correct":"0"}]},{"question":"Introducing more sophisticated training programs for unemployed workers during a recession","ID":"20","explanation":"You might like to read for further information or request an explanation via the comments.","answers":[{"ID":"124","answer":"is an ineffective strategy because it doesn"t take into account employer prejudices.","correct":"0"},{"ID":"123","answer":"is an ineffective strategy because even if it increases individual productivity it just shuffles the jobless queue.","correct":"1"},{"ID":"122","answer":"is an effective strategy because the workers become more productive and are hence more attractive to employers.","correct":"0"}]}]}, {"ID":"5","name":"The billy blog Saturday Quiz 5","added_on":"2009-04-17 20:16:35","questions":[{"question":"In February 2009, the unemployment rate was 5.7 per cent. If over the next 12 months GDP growth is -1 per cent (as expected), and the labour force growth slows to 1.6 per cent per annum and labour productivity growth is a flat 0.5 per cent per annum, then we would expect the unemployment in February 2010 to be approximately","ID":"21","explanation":"Please see Time to get real its bad! or post a question via the Comments.","answers":[{"ID":"166","answer":"6.8 per cent.","correct":"0"},{"ID":"165","answer":"7.8 per cent","correct":"0"},{"ID":"164","answer":"8.8 per cent","correct":"1"}]},{"question":"Norway has a lower unemployment rate than Australia","ID":"22","explanation":"Please see Norway colder than us but for further details or post a question via the Comments.","answers":[{"ID":"183","answer":"because its public sector is larger.","correct":"0"},{"ID":"184","answer":"because it consistently maintains a smaller gap between aggregate demand and potential output.","correct":"1"},{"ID":"182","answer":"because it has a smaller population and thus has to generate fewer jobs overall.","correct":"0"}]},{"question":"Aiming at some budget deficit target (as outlined in the Government"s Updated Economic and Fiscal Outlook for the 2008-09 Federal Budget) is futile becausen","ID":"23","explanation":"Please see The green shoots of recovery been looking! for further details or post a question via the Comments.","answers":[{"ID":"172","answer":"national government should maintain full employment.","correct":"0"},{"ID":"171","answer":"the automatic stabilisers are driven by private economic decisions.","correct":"1"},{"ID":"170","answer":"the national government can always finance its own spending.","correct":"0"}]},{"question":"The rising budget deficit will only become a problem","ID":"24","explanation":"Please see Size of Deficit 101 for further details or post a question via the Comments.","answers":[{"ID":"175","answer":"it will never be a problem because the national government is sovereign in its own currency.","correct":"0"},{"ID":"174","answer":"if it exceeds the non-government sector"s nominal desire to save in the currency of issue.","correct":"1"},{"ID":"173","answer":"if the non-government sector eventually stops buying the debt that the Government is issuing.","correct":"0"}]},{"question":"The latest data shows that Australians have on average lost more than 12 per cent of their real wealth in the last year as a result of the GFC. This means","ID":"25","explanation":"Please see Social security insolvency 101 for further details or post a question via the Comments.","answers":[{"ID":"178","answer":"that it will be neither harder or easier for the country as a whole to provide health care to our ageing population in the future.","correct":"1"},{"ID":"177","answer":"that it will harder for the country as a whole to provide health care to our ageing population in the future only if the wealth doesn"t grow again.","correct":"0"},{"ID":"176","answer":"that it will harder for the country as a whole to provide health care to our ageing population in the future.","correct":"0"}]}]}, {"ID":"6","name":"The billy blog Saturday Quiz 6","added_on":"2009-04-24 21:04:59","questions":[{"question":"The Australian (or US, for that matter) government"s net spending is","ID":"26","explanation":"Please see Money multiplier and other myths or post a question via the comments page.","answers":[{"ID":"217","answer":"similar in impact to money created by commercial bank credit creation.","correct":"0"},{"ID":"216","answer":"unique because spending derived from private credit creation cannot add to the private sector"s net worth.","correct":"1"},{"ID":"215","answer":"unique because the Government can always pay for goods and services by crediting bank accounts.","correct":"0"}]},{"question":"While it is likely that the GDP (output) gap will be around 5 per cent this year, the national government"s capacity to fill this gap","ID":"27","explanation":"Please see How large should the deficit be? or post a question via the comments page.","answers":[{"ID":"219","answer":"will be constrained by nothing but its political will.","correct":"1"},{"ID":"218","answer":"will be constrained by how much private bank lending is available to facilitate spending by consumers and firms.","correct":"0"},{"ID":"220","answer":"will be constrained by its ability to access capital in the global markets given the lack of credit available domestically at present.","correct":"0"}]},{"question":"From the perspective of aggregate demand, creating a minimum wage private sector job","ID":"28","explanation":"Please see Boondoggling and leaf-raking or post a question via the comments page.","answers":[{"ID":"206","answer":"will probably be better than creating a minimum wage public sector job because the private sector job is likely to be more productive.","correct":"0"},{"ID":"207","answer":"will probably be better than creating a minimum wage public sector job because the private sector job reflects market choices of what people want to buy.","correct":"0"},{"ID":"208","answer":"will probably have the same impact as creating a minimum wage public sector job.","correct":"1"}]},{"question":"If the Government introduced a permanent Job Guarantee (offer of minimum wage job to anyone who wanted it) then","ID":"29","explanation":"Please see Boondoggling and leaf-raking or post a question via the comments page.","answers":[{"ID":"209","answer":"it would have no inevitable implications for future deficits or aggregate demand levels.","correct":"1"},{"ID":"210","answer":"it would mean that aggregate demand would always be higher than otherwise.","correct":"0"},{"ID":"211","answer":"it would lock itself into budget deficits forever.","correct":"0"}]},{"question":"The losses that the Futures Fund (or any sovereign fund) has made on its share holding","ID":"30","explanation":"Please see The Futures Fund scandal or post a question via the comments page.","answers":[{"ID":"212","answer":"suggest that public and hence national saving has declined which will diminish the capacity of the national government to net spend in the future.","correct":"0"},{"ID":"213","answer":"are similar in concept to any depreciating publicly-held asset and have no implications for the national government"s future capacity to net spend.","correct":"1"},{"ID":"214","answer":"may need future taxation revenue offsets to restore the capacity of the national government to net spend in the future.","correct":"0"}]}]}, {"ID":"7","name":"The billy blog Saturday Quiz 7","added_on":"2009-05-01 20:21:15","questions":[{"question":"1. Among the Australian Government debts are Benchmark Treasury Fixed Coupon Bonds on issue. There are about $A61 billion outstanding and maturing at various dates. Around $A6 billion of them mature in September 2009 and the coupon value (interest rate) is 7.5 per cent. So although the government is not financially constrained","ID":"31","explanation":"Please read Lucky he"s not Treasurer anymore or post a comment for further discussion","answers":[{"ID":"292","answer":"it is not true that the debt has to be paid back because the government can spend whenever it likes.","correct":"0"},{"ID":"291","answer":"it remains true that the debt has to be paid back but this does not require any trade-off between debt servicing and other public projects.","correct":"1"},{"ID":"290","answer":"it remains true that the debt has to be paid back and so the government will have to choose which projects have to be sacrificed to service the debt.","correct":"0"}]},{"question":"2. There is talk that the international ratings agencies may reduce the Australian Government"s triple A bond rating if the deficit gets too large which may see higher short-term interest rates. If this occurs then we can ","ID":"32","explanation":"Please read Ratings agencies and higher interest rates or post a comment for further discussion","answers":[{"ID":"293","answer":"legitimately conclude that the rising deficit has caused borrowing costs to rise.","correct":"0"},{"ID":"294","answer":"legitimately conclude that the ratings agencies do not understand that the government is not financially constrained.","correct":"0"},{"ID":"295","answer":"legitimately conclude that the central bank has tightened monetary policy.","correct":"1"}]},{"question":"3. The Federal Government has announced a number of major infrastructure projects that it intends to fund (for example, its broadband plan and its defence plan). Their ability to implement these plans depends on","ID":"33","explanation":"Please read Lucky he"s not Treasurer anymore or post a comment for further discussion","answers":[{"ID":"308","answer":"the availability of real resources suitable for use.","correct":"1"},{"ID":"309","answer":"the economy improving such that the automatic stabilisers increase tax revenue.","correct":"0"},{"ID":"310","answer":"the bond markets continuing to purchase government bonds.","correct":"0"}]},{"question":"4. The rising unemployment in Australia at present","ID":"34","explanation":"Please read The OECD is at it again! or post a comment for further discussion","answers":[{"ID":"305","answer":"is due to international economic events associated with the global financial crisis.","correct":"0"},{"ID":"306","answer":"is due to the inadequate skills that the unemployed possess.","correct":"0"},{"ID":"307","answer":"is due to the Federal budget deficit not being large enough relative to GDP.","correct":"1"}]},{"question":"5. Higher government deficits may drive up interest rates if bond markets begin to get short of funds. This statement is false","ID":"35","explanation":"Please read Lucky he"s not Treasurer anymore or post a comment for further discussion","answers":[{"ID":"304","answer":"because interest rates are set in the private market and government debt has no real risk.","correct":"0"},{"ID":"303","answer":"because in modern monetary theory the government does not have a financial constraint.","correct":"0"},{"ID":"302","answer":"because the supply of treasury securities offered by the federal government is always equal to the newly created funds from the deficit.","correct":"1"}]}]}, {"ID":"8","name":"The billy blog Saturday Quiz 8","added_on":"2009-05-09 06:43:15","questions":[{"question":"2. If the central bank offered no return on overnight bank reserves then","ID":"37","explanation":"Please read The interest rate should be set to zero or post a comment for further discussion","answers":[{"ID":"384","answer":"running budget deficits would force banks to stop lending because they would not want non-performing reserves.","correct":"0"},{"ID":"383","answer":"running budget deficits would drive overnight interest rates down to zero.","correct":"1"},{"ID":"385","answer":"running budget deficits would drive interest rates up because it would create a scarcity of available loanable funds.","correct":"0"}]},{"question":"1. If the central bank set the interest rate to zero then","ID":"36","explanation":"Please read Interest rates should be set to zeo or post a comment for further discussion","answers":[{"ID":"356","answer":"there would be no incentive for banks to lend for housing.","correct":"0"},{"ID":"357","answer":"there would be a huge build up of private debt because credit would be cheap.","correct":"0"},{"ID":"358","answer":"investment rates would reflect risk.","correct":"1"}]},{"question":"3. It is inevitable that public debt will rise in Australia under current circumstances given","ID":"38","explanation":"Please read Federal budget 2009 - ignorance will drive bad policy or post a comment for further discussion","answers":[{"ID":"376","answer":"that the federal government knows that it would create hyperinflation if it didn"t drain the funds.","correct":"0"},{"ID":"375","answer":"that the federal government has voluntarily imposed a rule that it will match all net spending fully with market-based debt issues.","correct":"1"},{"ID":"374","answer":"that the federal government does not want to increase the overall tax take given the depth of the spending gap it is trying to fill.","correct":"0"}]},{"question":"4. The Australian economy has in net terms generated 62.2 thousand jobs since February 2008, but unemployment rate has risen from 3.9 per cent to its current 5.4 per cent. This is because","ID":"39","explanation":"Please read A surprise every day employment rises! or post a comment for further discussion","answers":[{"ID":"379","answer":"the labour force has contracted in the face of the global financial crisis discouraging workers to look for work.","correct":"0"},{"ID":"378","answer":"the dole conditions are too generous and there is a disincentive to work.","correct":"0"},{"ID":"377","answer":"the federal government deficit has not been large enough over the period.","correct":"1"}]},{"question":"5. The largest reason why China has grown so fast in the period 2004-2008 has been","ID":"40","explanation":"Please read Where the crisis means death! or post a comment for further discussion","answers":[{"ID":"382","answer":"its huge population which gives it such a large domestic market.","correct":"0"},{"ID":"381","answer":"the strength of its government spending.","correct":"1"},{"ID":"380","answer":"the strength of world demand for its exports.","correct":"0"}]}]}, {"ID":"9","name":"The billy blog Saturday Quiz 9","added_on":"2009-05-16 13:55:01","questions":[{"question":"1. The US Government has predicted a national deficit of 12.9 per cent of gross domestic product by September 30 and rising. In Tuesday"s Budget it was estimated that the Australian Government deficit to GDP ratio would be around 4.9 per cent in the coming fiscal year. The difference arises because","ID":"41","explanation":"Please read The size of the deficit should not be the focus or post a comment for further discussion","answers":[{"ID":"432","answer":"the US economy is larger than the Australian economy.","correct":"0"},{"ID":"433","answer":"the spending gap is higher in the US.","correct":"0"},{"ID":"431","answer":"the overall US Government budget is providing more stimulus than the Australian budget.","correct":"1"}]},{"question":"2. While it is true that the federal government is not revenue-constrained, the fact that it voluntarily issues debt every time it net spends","ID":"42","explanation":"Please read The size of the deficit should not be the focus or post a comment for further discussion","answers":[{"ID":"435","answer":"means that ultimately the deficit will match the spending gap.","correct":"0"},{"ID":"436","answer":"means that the government is wanting to provide the private sector with risk free wealth.","correct":"0"},{"ID":"434","answer":"means that for all intents and purposes it is acting like a household who faces a budget constraint.","correct":"1"}]},{"question":"3. The fact that the federal government has to pay back its debt","ID":"43","explanation":"Please read Flat Earth theory returns - budget aftermath or post a comment for further discussion","answers":[{"ID":"407","answer":"means that it is ultimately revenue-constrained despite being the issuer of the currency.","correct":"0"},{"ID":"408","answer":"means that the government has entered a legal contract to repay the debt.","correct":"1"},{"ID":"409","answer":"means that the deficit will ultimately be inflationary.","correct":"0"}]},{"question":"4. If the structural budget balance is in surplus but the overall budget is in deficit","ID":"44","explanation":"Please read Structural deficits - the great con job! or post a comment for further discussion","answers":[{"ID":"442","answer":"then we know that the automatic stabilisers are not working properly.","correct":"0"},{"ID":"441","answer":"then we know that the government is relaxing its policy stance to stimulate economic activity.","correct":"0"},{"ID":"440","answer":"then we know that the government policy stance is contractionary.","correct":"1"}]},{"question":"5. When the budget balance moves into deficit ","ID":"45","explanation":"Please read The deficit and debt debate or post a comment for further discussion.","answers":[{"ID":"445","answer":"you cannot conclude anything about the federal government"s intentions.","correct":"1"},{"ID":"443","answer":"it is a sign that the federal government is trying to stimulate the economy.","correct":"0"},{"ID":"444","answer":"it is a sign that the federal government is worried that unemployment is rising.","correct":"0"}]}]}, {"ID":"10","name":"The billy blog Saturday Quiz 10","added_on":"2009-05-23 17:39:39","questions":[{"question":"1. The Australian Treasury equates the NAIRU with full employment and uses this to calibrate their structural deficit estimates. Accordingly, these deficit estimates will be","ID":"46","explanation":"Please read Structural deficits - the great con job! or post a comment for further discussion.","answers":[{"ID":"466","answer":"difficult to assess because the Treasury forward estimates are subject to forecasting inaccuracy.","correct":"0"},{"ID":"465","answer":"biased upwards thus indicating, at any point in the business cycle, that the government fiscal stance is more expansionary than it actually is.","correct":"1"},{"ID":"464","answer":"biased downwards thus indicating, at any point in the business cycle, that the government fiscal stance is less expansionary than it actually is.","correct":"0"}]},{"question":"2. A national spending gap will emerge if desired domestic saving suddenly exceeds domestic investment. The sectoral balances relationship (from the national accounts) shows that","ID":"47","explanation":"Please read Norway and sectoral balances or post a comment for further discussion.","answers":[{"ID":"479","answer":"it is important in these situations to always increase the budget deficit to match the fall in private spending.","correct":"0"},{"ID":"480","answer":"it is important in these situations for banks to reduce interest rates to stimulate investment.","correct":"0"},{"ID":"481","answer":"the resulting spending gap may manifest as a combination of rising net exports and/or rising budget deficits.","correct":"1"}]},{"question":"3. The experience of Norway with its strong net exports contribution shows that","ID":"48","explanation":"Please read Norway and sectoral balances or post a comment for further discussion.","answers":[{"ID":"470","answer":"running budget deficits are not sufficient to generate low levels of unemployment.","correct":"0"},{"ID":"471","answer":"running budget deficits will be sufficient to generate low levels of unemployment.","correct":"1"},{"ID":"472","answer":"countries should pursue export-led growth strategies to generate low levels of unemployment.","correct":"0"}]},{"question":"4. The rising public debt levels that we are seeing will have to be paid back as the debt matures. These payments and the associated interest servicing will","ID":"49","explanation":"Please read Norway and sectoral balances or post a comment for further discussion.","answers":[{"ID":"473","answer":"reduce the room for other non-inflationary discretionary deficit spending because they will \"fill up the spending gap\" more quickly.","correct":"0"},{"ID":"474","answer":"reduce the capacity of the private sector to save because they will require cuts backs in the deficit to support the repayments.","correct":"0"},{"ID":"475","answer":"not reduce the room for other non-inflationary discretionary deficit spending because increasing imports will keep opening the spending gap that has to be \"filled\".","correct":"1"}]},{"question":"5. The Government could stimulate employment growth by cutting real wages across the board (which would not alter wage relativities unfairly)","ID":"50","explanation":"Please read Deficit spending 101 - Part 1 or post a comment for further discussion.","answers":[{"ID":"476","answer":"only if the real wage cuts reduced the overall desire to save by the non-government sector.","correct":"1"},{"ID":"477","answer":"only if workers accepted the cuts and agreed to supply more labour.","correct":"0"},{"ID":"478","answer":"because this will reduce labour costs and align them better with the declining revenue that the recession has caused.","correct":"0"}]}]}, {"ID":"11","name":"The billy blog Saturday Quiz 11","added_on":"2009-05-28 20:51:10","questions":[{"question":"1. A return to a fixed exchange rate system would","ID":"51","explanation":"Please read Gold standard and fixed exchange rates - myths that still prevail or post a comment for further discussion.","answers":[{"ID":"517","answer":"provide the basis for more instability in the international financial markets and undermine the capacity of the national government to control inflation more easily without having to increase unemployment.","correct":"1"},{"ID":"516","answer":"provide the capacity for national governments to resist hedge fund attacks on the currency and permit more effective trade contracts to be signed.","correct":"0"},{"ID":"515","answer":"provide the basis for more stability in the international financial markets and allow national governments to control inflation more easily without having to increase unemployment","correct":"0"}]},{"question":"2. The crucial difference between a monetary system based on the gold standard world and a fiat currency monetary is","ID":"52","explanation":"Please read Gold standard and fixed exchange rates - myths that still prevail or post a comment for further discussion.","answers":[{"ID":"520","answer":"that under the former system, the national government could not use net spending to achieve full employment.","correct":"0"},{"ID":"519","answer":"that under the former system, the national government had to issue debt to cover spending above taxation. ","correct":"1"},{"ID":"518","answer":"that under the former system, excessive national government spending led to inflation.","correct":"0"}]},{"question":"3. In a fiat monetary system, the concept of debt monetisation is inapplicable because","ID":"53","explanation":"Please read Gold standard and fixed exchange rates - myths that still prevail or post a comment for further discussion.","answers":[{"ID":"535","answer":"the central bank can set whatever interest rate it likes subject to its inflation targets.","correct":"0"},{"ID":"534","answer":"the central bank has to manage bank reserves if it wants to target a positive interest rate. ","correct":"1"},{"ID":"533","answer":"the central bank is independent from the treasury and doesn"t have to defend the exchange rate any longer.","correct":"0"}]},{"question":"4. Under the gold standard, a country with a chronic balance of payments deficit would face","ID":"54","explanation":"Please read Gold standard and fixed exchange rates - myths that still prevail or post a comment for further discussion.","answers":[{"ID":"537","answer":"an exchange rate collapse.","correct":"0"},{"ID":"538","answer":"constant domestic recession.","correct":"1"},{"ID":"536","answer":"constant inflationary pressures.","correct":"0"}]},{"question":"5. Under a fiat monetary system, the absence of convertibility means","ID":"55","explanation":"Please read Gold standard and fixed exchange rates - myths that still prevail or post a comment for further discussion.","answers":[{"ID":"540","answer":"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.","correct":"1"},{"ID":"539","answer":"there is no reason for people to hold currency as a hedge against gold price falls.","correct":"0"},{"ID":"541","answer":"that the currency is only convertible into government bonds rather than gold.","correct":"0"}]}]}, {"ID":"12","name":"The billy blog Saturday Quiz 12","added_on":"2009-06-05 21:43:29","questions":[{"question":"1. An ever expanding budget deficit is likely to be inflationary","ID":"56","explanation":"Please see A response to (green) critics - finale (for now)! for more information. If you are unsure ask a question via the comments.","answers":[{"ID":"586","answer":"only if it is not accompanied by proportional increases in borrowing.","correct":"0"},{"ID":"585","answer":"when it increases nominal demand beyond the saving desire of the non-government sector.","correct":"1"},{"ID":"584","answer":"because it adds to bank reserves and thus allows them to extend more credit which results in too much money being in the system.","correct":"0"}]},{"question":"2. The Australian government is in a better position to weather this current crisis and expand the deficit","ID":"57","explanation":"Please see Debts and deficits again! for more information. If you are unsure ask a question via the comments.","answers":[{"ID":"587","answer":"because it inherited a very low level of public debt.","correct":"0"},{"ID":"588","answer":"because it can enforce tax obligations in $AUD on its citizens and the currency trades internationally at market-set parities.","correct":"1"},{"ID":"589","answer":"because it has taken a cautious approach by not favouring business or unions.","correct":"0"}]},{"question":"3. BHP builds its business by borrowing and investing in assets which allow it to earn an economic rate of return. Most commentators applaud this level of entrepreneurship. The analogy","ID":"58","explanation":"Please see Debts and deficits again! for more information. If you are unsure ask a question via the comments.","answers":[{"ID":"590","answer":"also applies to the national government as long as it is earning a positive return on the projects it borrows against.","correct":"0"},{"ID":"591","answer":"does not apply to the national government because its investment decisions are not disciplined by the private market which forces funds to be efficiently deployed.","correct":"0"},{"ID":"592","answer":"does not apply to the national government because unlike BHP, its spending is not constrained by available revenue.","correct":"1"}]},{"question":"4. The projected budget deficit is $58 billion next financial year. It is likely that this injection will be","ID":"59","explanation":"Please see Debts and deficits again! for more information. If you are unsure ask a question via the comments.","answers":[{"ID":"581","answer":"inflationary if the private sector reacts to it and the lower interest rates and expands borrowing.","correct":"0"},{"ID":"582","answer":"deflationary because the potential output is growing faster than projected output (as evidenced by the Budget growth projections for GDP, labour productivity and the labour force).","correct":"1"},{"ID":"583","answer":"deflationary because the banks are not prepared to pass on the full central bank interest rate cuts.","correct":"0"}]},{"question":"5. Commercial banks should applaud the government going into deficit because","ID":"60","explanation":"Please see A response to (green) critics - finale (for now)! for more information. If you are unsure ask a question via the comments.","answers":[{"ID":"595","answer":"they provide net additions to bank reserves which increase their capacity to lend.","correct":"0"},{"ID":"594","answer":"they finance non-government saving which means the banks get more deposits which means they can expand credit to make profit.","correct":"0"},{"ID":"593","answer":"they generate an optimistic environment for investment which increases the proportion of credit-worthy customers.","correct":"1"}]}]}, {"ID":"13","name":"The billy blog Saturday Quiz 13","added_on":"2009-06-11 06:33:12","questions":[{"question":"1. It is reported that large international buyers of US Government treasury bonds are getting worried that the US deficit is getting too large. If they stop buying the bonds then","ID":"61","explanation":"Please read Public ownership rules airport rankings! for further material or post a comment if you want further explanation.","answers":[{"ID":"628","answer":"this will lead to the US dollar being abandoned as the convertible currency.","correct":"0"},{"ID":"627","answer":"this may drive up treasury bond yields but cannot reduce the capacity of the US Government to service its spending program.","correct":"1"},{"ID":"626","answer":"the US Government will run out of money and will have to cut back on its spending.","correct":"0"}]},{"question":"2. The fact that the US dollar is the strongest international currency and is in high demand by international investors (including foreign governments) means that the US Governmentnn","ID":"62","explanation":"Please read Public ownership rules airport rankings! for further material or post a comment if you want further explanation.","answers":[{"ID":"633","answer":"has a greater capacity to engage in fiscal expansion because there are more sources of funding available.","correct":"0"},{"ID":"632","answer":"has no greater capacity to engage in fiscal expansion than any other sovereign government.","correct":"1"},{"ID":"634","answer":"has to balance the inflationary pressures from pumping dollars into the economy with the political need to reduce unemployment.","correct":"0"}]},{"question":"3. If investors started to worry about the size of the Australian Government deficit and demand for federal public debt fell","ID":"63","explanation":"Please read Will we really pay higher interest rates? for further material or post a comment if you want further explanation.","answers":[{"ID":"617","answer":"the rise in interest rates (yields) would reflect the desire of the Government to have higher interest rates.","correct":"1"},{"ID":"618","answer":"the rise in interest rates (yields) would reflect the fact that the deficits were drawing on scarce private savings and increasing competition for them.","correct":"0"},{"ID":"619","answer":"the rise in interest rates (yields) would require the Government to reduce net spending.","correct":"0"}]},{"question":"4. Even if the government issues debt voluntarily in association with its deficits, the public debt is still","ID":"64","explanation":"Please read Will we really pay higher interest rates? for further material or post a comment if you want further explanation.","answers":[{"ID":"620","answer":"inherited by the next generation and reduces their possibilities as a consequence.","correct":"0"},{"ID":"621","answer":"is a benefit to existing investors who voluntarily choose them at the issue prices over holding other assets including low return bank reserves.","correct":"1"},{"ID":"622","answer":"ultimately reduces the capacity of the government to continue spending.","correct":"0"}]},{"question":"5. When the Australian government issues debt it logically ","ID":"65","explanation":"Please read Will we really pay higher interest rates? for further material or post a comment if you want further explanation.","answers":[{"ID":"623","answer":"increases the assets that are held by the non-government sector $-for-$.","correct":"0"},{"ID":"624","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"},{"ID":"625","answer":"has no impact on the overall holdings of assets held by the non-government sector $-for-$.","correct":"1"}]}]}, {"ID":"14","name":"The billy blog Saturday Quiz 14","added_on":"2009-06-17 05:50:34","questions":[{"question":"1. Countries that entered the current crisis with budget surpluses or smaller deficits will as a result","ID":"66","explanation":"Please read Fiscal sustainability 101 - Part 3 for further material or post a comment if you want further explanation.","answers":[{"ID":"650","answer":"have a better chance of minimising the real damage from the downturn because they have more fiscal room to provide stimulus.","correct":"0"},{"ID":"651","answer":"have no better or worse chance of minimising the real damage from the downturn.","correct":"1"},{"ID":"652","answer":"encounter less chance of stifling their recoveries through inflation.","correct":"0"}]},{"question":"2. Rising long-term bond yields are evidence that","ID":"67","explanation":"Please read Fiscal sustainability 101 - Part 3 for further material or post a comment if you want further explanation.","answers":[{"ID":"653","answer":"government borrowing is causing funds to dry up on that segment of the yield curve.","correct":"0"},{"ID":"654","answer":"investors fear that the government will default on its debt or inflate it away.","correct":"0"},{"ID":"655","answer":"investors are diversifying their financial asset portfolios as their confidence grows.","correct":"1"}]},{"question":"3. If the central bank does not pay interest to the bank"s on overnight reserves, then deficit spending by the treasury","ID":"68","explanation":"Please read Fiscal sustainability 101 - Part 3 for further material or post a comment if you want further explanation.","answers":[{"ID":"656","answer":"will put too much money in the system which ultimately is inflationary if the spending gap closes.","correct":"0"},{"ID":"657","answer":"will reduce short-term interest rates unless the central bank offers an interest-bearing government bond to the banks.","correct":"1"},{"ID":"658","answer":"will push up short-term interest rates if investors sense that inflation will be higher.","correct":"0"}]},{"question":"5. The automatic stabilisers","ID":"69","explanation":"Please read Fiscal sustainability 101 - Part 3 for further material or post a comment if you want further explanation.","answers":[{"ID":"659","answer":"operate to attenuate the business cycle in both directions but usually require discretionary spending adjustments to ensure full employment.","correct":"1"},{"ID":"660","answer":"will always get the budget back into balance because once growth resumes tax revenue rises and welfare spending falls.","correct":"0"},{"ID":"661","answer":"will always ensure that the economy will approach full employment because if spending is below potential tax revenue will keep falling and welfare spending rising.","correct":"0"}]},{"question":"4. Which of the following is not an example of inflation?n","ID":"70","explanation":"Please read Fiscal sustainability 101 - Part 3 for further material or post a comment if you want further explanation.","answers":[{"ID":"662","answer":"Firms adjust their prices upwards to normal capacity levels after discounting them during the recession to maintain market share.","correct":"0"},{"ID":"663","answer":"The OPEC oil cartel announces that it will increase oil prices by 5 per cent per quarter over the next 5 years.","correct":"1"},{"ID":"664","answer":"The price of imports rises because the exchange rate depreciates by 10 per cent.","correct":"0"}]}]}, {"ID":"15","name":"The billy blog Saturday Quiz 15","added_on":"2009-06-26 02:02:01","questions":[{"question":"1. Japan was able to keep interest rates at zero for 15 or more years because","ID":"71","explanation":"Please read More back to fiat monetary system basics! for more information or post a comment if you are unsure.","answers":[{"ID":"672","answer":"the Bank of Japan did not issue enough bonds to fully drain the reserves added by the large daily fiscal deficits.","correct":"1"},{"ID":"671","answer":"the economy was in such bad shape that there was no demand for funds and so lenders had to take low returns.","correct":"0"},{"ID":"673","answer":"the Bank of Japan were convinced that inflation was under control.","correct":"0"}]},{"question":"2. Taxation revenue will rise as the budget deficits rise because ","ID":"72","explanation":"Please read The budget deficits will increase taxation! for more information or post a comment if you are unsure.","answers":[{"ID":"706","answer":"the higher net spending increases economic activity and more people become employed.","correct":"1"},{"ID":"707","answer":"the higher net spending ultimately has to be paid for even if in the short-run the government is not revenue-constrained.","correct":"0"},{"ID":"708","answer":"the higher net spending requires higher tax rates so that people will demand more currency.","correct":"0"}]},{"question":"3. The government deficits may ultimately lead to higher tax rates being imposed","ID":"73","explanation":"Please read The budget deficits will increase taxation! for more information or post a comment if you are unsure.","answers":[{"ID":"711","answer":"because the government will need more money to continue spending.","correct":"0"},{"ID":"709","answer":"because ultimately, whether we like it or not, the public debt has to be paid back.","correct":"0"},{"ID":"710","answer":"if nominal demand increases too fast in relation to the real capacity levels.","correct":"1"}]},{"question":"4. The German fiscal rule to ban deficits and run balanced budgets would work","ID":"74","explanation":"Please read Fiscal rules going mad for more information or post a comment if you are unsure.","answers":[{"ID":"700","answer":"if private investment was always growing strongly.","correct":"0"},{"ID":"701","answer":"if desired non-government saving was always zero.","correct":"1"},{"ID":"702","answer":"if both consumption and private investment was always growing strongly.","correct":"0"}]},{"question":"5. If the economy has unemployed workers but cannot produce any more real output then the government","ID":"75","explanation":"Please read Bad luck if you are poor! for more information or post a comment if you are unsure.","answers":[{"ID":"705","answer":"will generate inflation if it wants to achieve full employment.","correct":"0"},{"ID":"704","answer":"has to increase net spending until the spending gap is filled if it wants to achieve full employment.","correct":"0"},{"ID":"703","answer":"has to raise taxation if it wants to achieve full employment.","correct":"1"}]}]}, {"ID":"16","name":"The billy blog Saturday Quiz 16","added_on":"2009-07-04 12:36:27","questions":[{"question":"1. In the modern parlance, a liquidity trap occurs when","ID":"76","explanation":"Please read Balance sheet recessions and democracy for more information or post a comment if you are unsure.","answers":[{"ID":"762","answer":"banks have excess reserves from budget deficits which means low interest rates do not stimulate the economy.","correct":"0"},{"ID":"760","answer":"banks do not have enough cash to lend which means that low interest rates do not stimulate the economy.","correct":"0"},{"ID":"761","answer":"banks cannot find any credit-worthy borrowers which means that low interest rates do not stimulate the economy.","correct":"1"}]},{"question":"2. Consider this logic: (a) Atoms are not visible to the naked eye; (b) Humans are made up of atoms; (c) Therefore, humans are not visible to the naked eye. This logical flaw is demonstrated in macroeconomics by","ID":"77","explanation":"Please read Balance sheet recessions and democracy for more information or post a comment if you are unsure.","answers":[{"ID":"766","answer":"the paradox of thrift.","correct":"1"},{"ID":"768","answer":"the Government Budget Constraint.","correct":"0"},{"ID":"767","answer":"the Gold Standard.","correct":"0"}]},{"question":"3. If a household saves a higher proportion of their income they will have higher future consumption possibilities. Therefore if all households save a higher proportion of their income then all households will have higher future consumption possibilities. This logic is nn","ID":"78","explanation":"Please read Balance sheet recessions and democracy for more information or post a comment if you are unsure.","answers":[{"ID":"771","answer":"is only true if taxation is held constant.","correct":"0"},{"ID":"770","answer":"is only true if government increases its deficit in line with the saving increase.","correct":"1"},{"ID":"769","answer":"is only true if interest rates rise and deliver higher returns on the saving.","correct":"0"}]},{"question":"4. Rising government bond yields for new issues indicate","ID":"79","explanation":"Please read Time for a reality check on debt - Part 1 for more information or post a comment if you are unsure.","answers":[{"ID":"773","answer":"that bond prices are falling in response to demand.","correct":"1"},{"ID":"772","answer":"that government spending is becoming more expensive.","correct":"0"},{"ID":"774","answer":"that government spending is increasing the cost of borrowing for private investors.","correct":"0"}]},{"question":"5. In a \"balanced sheet recession\", aggregate demand falls","ID":"80","explanation":"Please read Balance sheet recessions and democracy for more information or post a comment if you are unsure.","answers":[{"ID":"777","answer":"because businesses and households start saving to reduce the debt exposure they created in the boom.","correct":"1"},{"ID":"776","answer":"because government creates fiscal drag by running budget surpluses.","correct":"0"},{"ID":"775","answer":"because businesses become pessimistic about future rates of return and stop investing.","correct":"0"}]}]}, {"ID":"17","name":"The billy blog Saturday Quiz 17","added_on":"2009-07-18 13:48:46","questions":[{"question":"1. If more people flow out of employment into unemployment than flow into employment from unemployment in any month, then the unemployment rate will","ID":"81","explanation":"Go to What can the gross flows tell us? to learn more or post a comment if you need more information.","answers":[{"ID":"793","answer":"rise because less people have work than in the last period.","correct":"0"},{"ID":"794","answer":"fall because the labour force declines as employment falls.","correct":"0"},{"ID":"795","answer":"cannot tell because we do not know what the flows between the labour force and non-participation were.","correct":"1"}]},{"question":"2. In a fixed coupon government bond auction, the higher is the demand for the bonds ","ID":"82","explanation":"Go to D for debt bomb; D for drivel to learn more or post a comment if you need more information.","answers":[{"ID":"814","answer":"the lower the yields will be at that asset maturity but this tells us nothing about the effect of budget deficits on short-term interest rates.","correct":"1"},{"ID":"812","answer":"the higher the yields will be at that asset maturity which suggests that higher budget deficits will eventually drive short-term interest rates down.","correct":"0"},{"ID":"813","answer":"the lower the yields will be at that asset maturity which suggests that higher budget deficits will eventually drive short-term interest rates down.","correct":"0"}]},{"question":"3. The automatic stabilisers that are built into fiscal policy ensure that","ID":"83","explanation":"Go to Nobel prize winner sounding a trifle modern moneyish to learn more or post a comment if you need more information.","answers":[{"ID":"799","answer":"every decline in non-government spending will be attenuated by the rise in the budget deficit.","correct":"1"},{"ID":"800","answer":"eventually the economy will resume growth after non-government spending falls because the budget deficit rises.","correct":"0"},{"ID":"801","answer":"a rise in private saving does not cause a rise in unemployment.","correct":"0"}]},{"question":"4. A sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues","ID":"84","explanation":"Go to Debt is not debt to learn more or post a comment if you need more information.","answers":[{"ID":"802","answer":"the less is the volume of investment funds in the non-government sector that can be used for other investments.","correct":"0"},{"ID":"803","answer":"the more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"},{"ID":"804","answer":"the greater is non-government wealth held in the form of public debt.","correct":"1"}]},{"question":"5. It is argued that the deleveraging of the Japanese private sector helped Japan avoid recession in the 1990s because the increased savings provided the finance for the huge budget deficits.","ID":"85","explanation":"Go to D for debt bomb; D for drivel to learn more or post a comment if you need more information.","answers":[{"ID":"817","answer":"This statement is incorrect because the saving intentions of the private sector would have been thwarted if the government deficits had not have provided enough spending to allow the economy to grow.","correct":"1"},{"ID":"816","answer":"This statement is correct because the private saving does free up real resources that can be bought by the government and in this sense can be thought of as financing the deficit.","correct":"0"},{"ID":"815","answer":"This statement is partially correct because even though the government doesn"t need to finance its deficits it still needs the fiscal space to net spend.","correct":"0"}]}]}, {"ID":"18","name":"The billy blog Saturday Quiz 18","added_on":"2009-07-24 20:23:30","questions":[{"question":"1. If the flows from part-time employment to full-time employment are less than the flows from full-time employment to part-time employment then part-time employment must be rising.","ID":"86","explanation":"You might read More gross flows movements between employment or post a comment if you want further information.","answers":[{"ID":"828","answer":"True","correct":"0"},{"ID":"829","answer":"False","correct":"1"}]},{"question":"2. The billions of US dollars that the Federal Reserve in America has pumped into reserves has made it easier for commercial banks to lend and kick start the economy.","ID":"87","explanation":"You might read Fed chairman not quite getting it or post a comment if you want further information.","answers":[{"ID":"831","answer":"False","correct":"1"},{"ID":"830","answer":"True","correct":"0"}]},{"question":"3. Rising yields on government bonds will accompany a falling demand for the bonds relative to their supply into the bond markets.","ID":"88","explanation":"You might read Nobel prize winner sounding a trifle modern moneyish or post a comment if you want further information.","answers":[{"ID":"833","answer":"False","correct":"0"},{"ID":"832","answer":"True","correct":"1"}]},{"question":"4. A sovereign government holding foreign currency denominated debt is less exposed to exchange rate movements than a household which uses the currency because the government issues the currency and can credit bank accounts.","ID":"89","explanation":"You might read The world is going insane I think or post a comment if you want further information.","answers":[{"ID":"835","answer":"False","correct":"1"},{"ID":"834","answer":"True","correct":"0"}]},{"question":"5. Luigi Pasinetti said that \"investment brings forth its own saving\". This insight tells you that government deficits will never result in financial crowding out.","ID":"90","explanation":"You might read Fed chairman not quite getting it or post a comment if you want further information.","answers":[{"ID":"837","answer":"False","correct":"0"},{"ID":"836","answer":"True","correct":"1"}]}]}, {"ID":"19","name":"The billy blog Saturday Quiz 19","added_on":"2009-08-01 08:11:29","questions":[{"question":"1. The huge build-up of reserves in the US Banking system make it easier for banks to lend to credit worthy customers.","ID":"91","explanation":"You might read Why doesnt this attract headlines? or post a comment if you want further information.","answers":[{"ID":"849","answer":"False","correct":"1"},{"ID":"848","answer":"True","correct":"0"}]},{"question":"2. If the non-government sector desires to net save in the currency of issue and acts accordingly, national income (GDP) adjustments will ensure the government sector is in deficit, irrespective of the intentions of the government.","ID":"92","explanation":"You might read The piper will call if surpluses are pursued or post a comment if you want further information.","answers":[{"ID":"861","answer":"False","correct":"0"},{"ID":"860","answer":"True","correct":"1"}]},{"question":"3. The capacity of the central bank to conduct monetary policy is not independent of the level of bank reserves unless they pay interest on excess reserves.","ID":"93","explanation":"You might read Why doesnt this attract headlines? or post a comment if you want further information.","answers":[{"ID":"855","answer":"False","correct":"0"},{"ID":"854","answer":"True","correct":"1"}]},{"question":"4. The problem with foreigners holding significant public debt is that if they lose confidence and liquidate their debt holdings, the local exchange rate will depreciate sharply.","ID":"94","explanation":"You might read The piper will call if surpluses are pursued or post a comment if you want further information.","answers":[{"ID":"859","answer":"False","correct":"1"},{"ID":"858","answer":"True","correct":"0"}]},{"question":"5. The US government could stimulate bank lending by imposing a tax on excess reserves held by the banks at the central bank.","ID":"95","explanation":"You might read Why doesnt this attract headlines? or post a comment if you want further information.","answers":[{"ID":"853","answer":"False","correct":"1"},{"ID":"852","answer":"True","correct":"0"}]}]}, {"ID":"20","name":"The billy blog Saturday Quiz 19","added_on":"2009-08-08 14:35:18","questions":[{"question":"1. Even though a national government is not revenue constrained, their surpluses can add to national saving if they arise from the private sector spending less than total GDP (income) produced.","ID":"96","explanation":"You might read Debates in modern monetary macro or post a comment if you want further information.","answers":[{"ID":"875","answer":"False","correct":"1"},{"ID":"874","answer":"True","correct":"0"}]},{"question":"2. The latest ABS data shows that total hours worked are falling relative to total persons employed which must mean that underemployment is replacing unemployment.","ID":"97","explanation":"You might read The labour market barely hanging on or post a comment if you want further information.","answers":[{"ID":"877","answer":"False","correct":"1"},{"ID":"876","answer":"True","correct":"0"}]},{"question":"3. A single banks can rid itself of excess reserves held with the central bank by lending them into the Interbank market whereas a system-wide reserve excess can be eliminated if consumers withdraw their deposits and spend the money on real goods and services.","ID":"98","explanation":"You might read Debates in modern monetary macro or post a comment if you want further information.","answers":[{"ID":"879","answer":"False","correct":"1"},{"ID":"878","answer":"True","correct":"0"}]},{"question":"4. An understanding of modern monetary theory reveals that from a macroeconomic perspective the sovereign government only ever borrows funds that it has already previously spent.","ID":"99","explanation":"You might read Why doesnt this attract headlines? or post a comment if you want further information.","answers":[{"ID":"881","answer":"False","correct":"0"},{"ID":"880","answer":"True","correct":"1"}]},{"question":"5. If there is a current account deficit, and the domestic private sector seeks to increase its saving as a percentage of GDP, then income adjustments will ensure the government budget is in deficit.","ID":"100","explanation":"You might read How do budget deficits finance saving? or post a comment if you want further information.","answers":[{"ID":"873","answer":"False","correct":"0"},{"ID":"872","answer":"True","correct":"1"}]}]}, {"ID":"21","name":"The billy blog Saturday Quiz 20","added_on":"2009-08-14 21:18:46","questions":[{"question":"1. Growth in private investment requires a pool of saving to draw upon. This means that if government net spending is also drawing on those savings (even if the borrowing is voluntary) then less will be available for private capacity building. That is appropriate though when investors are pessimistic.","ID":"101","explanation":"You might like to review Twisted logic and just plain misinformation for further information or post a comment.","answers":[{"ID":"893","answer":"False","correct":"1"},{"ID":"892","answer":"True","correct":"0"}]},{"question":"2. Mainstream economic theory considers output per unit of person employed (labour productivity) to be counter-cyclical (rises when activity falls and vice versa) - given they think the demand for labour is inversely related to the real wage. That is, they believe that when firms employ more workers productivity drops and so the real wage also have to fall to make it profitable. The real world observation that hours worked are adjusted before persons employed in response to changes in sales volumes means that output per unit of person employed is pro-cyclical which renders the main insights of orthodox labour demand theory inapplicable.","ID":"102","explanation":"You might like to review Dumbed down economy doesnt lose as many jobs for further information or post a comment.","answers":[{"ID":"921","answer":"False","correct":"0"},{"ID":"920","answer":"True","correct":"1"}]},{"question":"3. If employment growth is 2 per cent per annum; labour force growth is 2 per cent per annum and labour productivity growth (in persons employed) is 1 per cent per annum, then you know GDP growth is insufficient to stop the unemployment rate from rising (assuming weekly hours worked is constant).","ID":"103","explanation":"You might like to review The waves of recession for further information or post a comment.","answers":[{"ID":"917","answer":"False","correct":"1"},{"ID":"916","answer":"True","correct":"0"}]},{"question":"4. Irrespective of the government"s policy intention, it will always be in deficit if the non-government sector desires to save in the currency of issue and acts accordingly.","ID":"104","explanation":"You might like to review Some myths about modern monetary theory and its developers for further information or post a comment.","answers":[{"ID":"919","answer":"False","correct":"0"},{"ID":"918","answer":"True","correct":"1"}]},{"question":"5. Real unit labour costs (RULC) are measured by dividing the real wage by output per unit of employment (labour productivity) and tell us how much in labour terms each unit of output cost to produce. RULC always rise when employment falls which is a good empirical indicator that real wages are too high.","ID":"105","explanation":"You might like to review Dumbed down economy doesnt lose as many jobs for further information or post a comment.","answers":[{"ID":"911","answer":"False","correct":"1"},{"ID":"910","answer":"True","correct":"0"}]}]}, {"ID":"22","name":"The billy blog Saturday Quiz 21","added_on":"2009-08-22 14:33:46","questions":[{"question":"1. An understanding of the way bank reserves interact with the central bank tells us that when the government spends less than it taxes in any period its bank balance at the central bank rises which this gives it more capacity to spend the next period.","ID":"106","explanation":"You might like to review The impact of government on reserve dynamics for further information or post a comment.","answers":[{"ID":"933","answer":"False","correct":"1"},{"ID":"932","answer":"True","correct":"0"}]},{"question":"2. If the central bank requires commercial banks to maintain a positive fraction of its deposits as reserves (say 5 per cent) then this modifies the idea that loans create deposits because then the banks have to have reserves before they can lend.","ID":"107","explanation":"You might like to review The impact of government on reserve dynamics for further information or post a comment.","answers":[{"ID":"935","answer":"False","correct":"1"},{"ID":"934","answer":"True","correct":"0"}]},{"question":"3. The interest rate in the interbank market is the price that banks have to pay for overnight funds that are held in the reserve accounts the private banks hold at the central bank. If the total demand for reserves equals the total supply of reserves, then overnight interbank lending will not compromise the central banks short-term interest rate target.","ID":"108","explanation":"You might like to review The impact of government on reserve dynamics for further information or post a comment.","answers":[{"ID":"945","answer":"False","correct":"0"},{"ID":"944","answer":"True","correct":"1"}]},{"question":"4. The fall in hours worked is larger than the fall in persons employed, which economists refer to as \"labour hoarding\" - that is, firms are holding onto persons but cutting their hours of work. If GDP growth over the next 12 months is 2 per cent and the labour force grows by 2 per cent, the labour hoarding will mean that the unemployment rate will continue to rise.","ID":"109","explanation":"You might like to review Another sorry chapter in RBA history is looming for further information or post a comment.","answers":[{"ID":"939","answer":"False","correct":"0"},{"ID":"938","answer":"True","correct":"1"}]},{"question":"5. The imposition of taxes (without a concomitant injection of spending) by design creates unemployment (people seeking paid work) in the non-government sector. This allows a transfer of real goods and services from the non-government to the government sector via government spending.","ID":"110","explanation":"You might like to review Deficit spending 101 Part 1 for further information or post a comment.","answers":[{"ID":"941","answer":"False","correct":"0"},{"ID":"940","answer":"True","correct":"1"}]}]}, {"ID":"23","name":"The billy blog Saturday Quiz 22","added_on":"2009-08-28 20:50:01","questions":[{"question":"1. The problem in the baby-sitting economy was that the cooperative were running a budget surplus which constrained the number of scrips that were available to exchange for baby-sitting services.","ID":"111","explanation":"You might like to review A baby-sitting economy for further information or post a comment.","answers":[{"ID":"971","answer":"False","correct":"1"},{"ID":"970","answer":"True","correct":"0"}]},{"question":"2. If private investors become saturated with Australian government debt issues as the deficits rise, their demand will drop and yields will rise for those maturities (say 10-year bonds). This spills over into increased borrowing costs for the private sector generally and reduces the desire to invest.","ID":"112","explanation":"You might like to review When leading economists become part of the problem for further information or post a comment.","answers":[{"ID":"975","answer":"False","correct":"1"},{"ID":"974","answer":"True","correct":"0"}]},{"question":"3. A country that has been running budget surpluses will have less capacity to deal with an economic downturn, despite what mainstream economists say. This is because to maintain spending growth in the face of rising fiscal drag, the private sector would have built up higher levels of debt than otherwise and face increased insolvency risk as a consequence.","ID":"113","explanation":"You might like to review TWhen leading economists become part of the problem for further information or post a comment.","answers":[{"ID":"979","answer":"False","correct":"1"},{"ID":"978","answer":"True","correct":"0"}]},{"question":"4. The massive build-up of Chinese holdings of US government debt has allowed US citizens to enjoy a higher material standard of living at the expense of the residents of China.","ID":"114","explanation":"You might like to review Fed Reserve about to take over New York Times! for further information or post a comment.","answers":[{"ID":"981","answer":"False","correct":"0"},{"ID":"980","answer":"True","correct":"1"}]},{"question":"5. Short-term interest rates are set by the central bank while the fiscal strategy manifests in tax and spending decisions by the government. Whereas the private sector cannot directly influence the interest rate target being set it can determine the size of the budget deficit at any point in time.","ID":"115","explanation":"You might like to review The impact of government on reserve dynamics for further information or post a comment.","answers":[{"ID":"985","answer":"False","correct":"0"},{"ID":"984","answer":"True","correct":"1"}]},{"question":"6. The US Federal Reserve is about to take over the New York Times and use its printing press to print more government bonds.","ID":"116","explanation":"There is no explanation for such certifiable idiocy.","answers":[{"ID":"969","answer":"Ridiculous","correct":"1"},{"ID":"968","answer":"True","correct":"0"}]}]}, {"ID":"24","name":"The billy blog Saturday Quiz 23","added_on":"2009-09-04 21:07:30","questions":[{"question":"1. If the non-government sector had a positive desire to save and the economy was at full employment, then in the absence of central bank intervention, the overnight interest rate would fall to zero.","ID":"117","explanation":"You might like to review The natural rate of interest is zero! for further information or post a comment.","answers":[{"ID":"997","answer":"False","correct":"0"},{"ID":"996","answer":"True","correct":"1"}]},{"question":"2. Prior to the Great Depression, economists believed that saving was required to provide the funds for investment and that the interest rate would regulate the relationship between the two. Keynes showed that investment created its own saving through income adjustments rather than interest rate adjustments.","ID":"118","explanation":"You might like to review Knowlegable economic commentary still exists for further information or post a comment.","answers":[{"ID":"999","answer":"False","correct":"0"},{"ID":"998","answer":"True","correct":"1"}]},{"question":"3. In a deflationary environment, the real interest rate will eventually rise as long as the central bank does not introduce negative overnight rates.","ID":"119","explanation":"You might like to review Negative interest rates QE gone mad for further information or post a comment.","answers":[{"ID":"1001","answer":"False","correct":"0"},{"ID":"1000","answer":"True","correct":"1"}]},{"question":"4. A negative overnight interest rate means that the central bank is effectively imposing a fine on or taxing the private banks that hold reserves overnight. This is not inconsistent, however, with the central bank"s major role which is to see there are sufficient reserves in the banking system at all times.","ID":"120","explanation":"You might like to review Negative interest rates QE gone mad for further information or post a comment.","answers":[{"ID":"1007","answer":"False","correct":"0"},{"ID":"1006","answer":"True","correct":"1"}]},{"question":"5. In a mainstream macroeconomics model there can be no general overproduction (unsold goods) and therefore no unemployment if the real interest rate is allowed to adjust freely to match unconsumed income with the intentions of investors.","ID":"121","explanation":"You might like to review The natural rate of interest is zero! for further information or post a comment.","answers":[{"ID":"1005","answer":"False","correct":"0"},{"ID":"1004","answer":"True","correct":"1"}]}]}, {"ID":"25","name":"The billy blog Saturday Quiz 24","added_on":"2009-09-09 11:52:21","questions":[{"question":"1. A stock-flow consistent macroeconomic framework shows categorically that as long as net government spending grows in line with GDP, inflation will not be a problem.","ID":"122","explanation":"You might like to review Stock-flow consistent macro models for further information or post a comment.","answers":[{"ID":"1029","answer":"False","correct":"1"},{"ID":"1028","answer":"True","correct":"0"}]},{"question":"2. A rising federal budget deficit indicates the stock of net government spending at that level is also rising to support private saving.","ID":"123","explanation":"You might like to review Stock-flow consistent macro models for further information or post a comment.","answers":[{"ID":"1021","answer":"False","correct":"1"},{"ID":"1020","answer":"True","correct":"0"}]},{"question":"3. When an external deficit (X M < 0) and public deficit (G - T > 0) coincide, there must be a private sector deficit, which means that governments can only really run budget deficits safely to support a private sector surplus, when net exports are strong.","ID":"124","explanation":"You might like to review Stock-flow consistent macro models for further information or post a comment.","answers":[{"ID":"1023","answer":"False","correct":"1"},{"ID":"1022","answer":"True","correct":"0"}]},{"question":"4. If an individual repays a bank loan in dollar bills instead of with a cheque, this transaction will not destroy the financial assets created when the loan was made because a bank will never destroy that cash. So not all transactions between non-government entities net to zero.","ID":"125","explanation":"You might like to review Stock-flow consistent macro models for further information or post a comment.","answers":[{"ID":"1025","answer":"False","correct":"1"},{"ID":"1024","answer":"True","correct":"0"}]},{"question":"5. The Austrian School is correct in one way that we should acknowledge. If there is a lack of desire to save among households then investors will find it difficult to get funds at reasonable prices to build productive capacity.","ID":"126","explanation":"You might like to review Retail sales a story within a story for further information or post a comment.","answers":[{"ID":"1027","answer":"False","correct":"1"},{"ID":"1026","answer":"True","correct":"0"}]}]}, {"ID":"26","name":"The billy blog Saturday Quiz 25","added_on":"2009-09-18 17:45:31","questions":[{"question":"1. If the national government is running a daily deficit then at the end of each day you have a positive stock of government net spending.","ID":"127","explanation":"You might like to review Macroeconomics get lost in the kitchen cupboard for further information or post a comment.","answers":[{"ID":"1043","answer":"False","correct":"1"},{"ID":"1042","answer":"True","correct":"0"}]},{"question":"2. If public employment and private employment growth match the growth in the labour force, then unemployment cannot rise.","ID":"128","explanation":"You might like to review What if public employment? for further information or post a comment.","answers":[{"ID":"1045","answer":"False","correct":"1"},{"ID":"1044","answer":"True","correct":"0"}]},{"question":"3. If a country runs a permanent external deficit (current account), and its government aims to balance its budget (on average) over the course of a business cycle (peak to peak in GDP), then it means that the government also wants the private domestic sector to run deficits (spend more than they are earning and increase their debt obligations) over the same business cycle.","ID":"129","explanation":"You might like to review Macroeconomics get lost in the kitchen cupboard for further information or post a comment.","answers":[{"ID":"1063","answer":"False","correct":"0"},{"ID":"1062","answer":"True","correct":"1"}]},{"question":"4. It is clear that as the population ages, we will reach some point when the non-government sector will begin to dis-save because individuals no longer have any need to accumulate assets for future consumption. This will mean the government will have to run surpluses as a matter of national accounting.","ID":"130","explanation":"You might like to review Signs of recovery prompt cries for surpluses for further information or post a comment.","answers":[{"ID":"1065","answer":"False","correct":"0"},{"ID":"1064","answer":"True","correct":"1"}]},{"question":"5. The unemployment rate will remain stable if the sum of public and private employment growth is equal to the growth in the labour force.","ID":"131","explanation":"You might like to review What if public employment? for further information or post a comment.","answers":[{"ID":"1067","answer":"False","correct":"0"},{"ID":"1066","answer":"True","correct":"1"}]}]}, {"ID":"27","name":"The billy blog Saturday Quiz 26","added_on":"2009-09-26 10:55:47","questions":[{"question":"1. It is important that households keep saving now to reduce their debt exposure and provide the funds for investment to get the economy moving again.","ID":"132","explanation":"You might like to review The IMF fall into a loanable funds black hole again for further information or post a comment.","answers":[{"ID":"1081","answer":"False","correct":"1"},{"ID":"1080","answer":"True","correct":"0"}]},{"question":"2. If the prudential regulation authority requires all authorised deposit-taking institutions to hold a certain proportion of their assets in the form of government bonds then this amounts to a small government tax on those institutions.","ID":"133","explanation":"You might like to review Banks might be forced to buy government bonds for further information or post a comment.","answers":[{"ID":"1083","answer":"False","correct":"0"},{"ID":"1082","answer":"True","correct":"1"}]},{"question":"3. Under current US legal arrangements, the willingness of the Chinese to purchase US government bonds has allowed the US government to run bigger deficits than they might have.","ID":"134","explanation":"You might like to review We still have the elephant in the room for further information or post a comment.","answers":[{"ID":"1085","answer":"False","correct":"0"},{"ID":"1084","answer":"True","correct":"1"}]},{"question":"4. If German and Chinese consumers increased their spending it would stimulate the world economy and increase the living standards of countries that export goods to them.","ID":"135","explanation":"You might like to review We still have the elephant in the room for further information or post a comment.","answers":[{"ID":"1087","answer":"False","correct":"1"},{"ID":"1086","answer":"True","correct":"0"}]},{"question":"5. Sovereign funds do not store budget surpluses as national savings. They just account for assets that the government has bought in the same way that the property records of, say, the public schools and hospitals record holdings of other public assets accumulated through government spending.","ID":"136","explanation":"You might like to review Operational design arising from modern monetary theory for further information or post a comment.","answers":[{"ID":"1091","answer":"False","correct":"0"},{"ID":"1090","answer":"True","correct":"1"}]}]}, {"ID":"28","name":"The billy blog Saturday Quiz 27","added_on":"2009-10-03 06:24:42","questions":[{"question":"1. When a person repays a bank loan using actual cash the bank extinguishes the loan (reduces asset) but there is no liability adjustment because the payment did not come from the person running down a deposit account (a liability to the bank). So given the cash doesn"t get destroyed by the bank this transaction creates a change in the net financial asset position within the non-government sector.","ID":"137","explanation":"You might like to review In the spirit of debate my reply Part 2 for further information or post a comment.","answers":[{"ID":"1103","answer":"False","correct":"1"},{"ID":"1102","answer":"True","correct":"0"}]},{"question":"2. In a situation where the private domestic sector decides to lift its saving ratio we cannot conclude that the national government has to increase its net spending (deficit) to avoid employment losses.","ID":"138","explanation":"You might like to review In the spirit of debate my reply Part 2 for further information or post a comment.","answers":[{"ID":"1121","answer":"False","correct":"0"},{"ID":"1120","answer":"True","correct":"1"}]},{"question":"3. Mainstream economic theory adopts a government budget constraint framework to analyse the consequences of fiscal policy and predicts that budget deficits now result in higher taxes and interest rates in the future. Assume that framework was an accurate depiction of the monetary system. We would then also conclude that if you want low interest rates then surpluses are better and the relative size of government in the economy has to be smaller.","ID":"139","explanation":"You might like to review In the spirit of debate my reply Part 2 for further information or post a comment.","answers":[{"ID":"1109","answer":"False","correct":"1"},{"ID":"1108","answer":"True","correct":"0"}]},{"question":"4. An employment guarantee system administered by a national currency-issuing government is not financially sustainable if the entire labour force was working in it because then there would be no-one left to pay taxes.","ID":"140","explanation":"You might like to review In the spirit of debate my reply Part 3 for further information or post a comment.","answers":[{"ID":"1119","answer":"False","correct":"1"},{"ID":"1118","answer":"True","correct":"0"}]},{"question":"5. In a fiat monetary system (for example, US or Australia) with an on-going external deficit, if you desire the domestic private sector to reduce its overall debt levels without employment losses, then you have to support the national government continually increasing the budget deficit in line with the private de-leveraging process.","ID":"141","explanation":"You might like to review In the spirit of debate my reply Part 2 for further information or post a comment.","answers":[{"ID":"1113","answer":"False","correct":"0"},{"ID":"1112","answer":"True","correct":"1"}]}]}, {"ID":"29","name":"The billy blog Saturday Quiz 28","added_on":"2009-10-10 12:40:01","questions":[{"question":"1. In a fiat monetary system, national government spending is not revenue constrained. But there are also circumstances when the non-government sector spending is similarly not constrained by available revenue. An example is if the local lunch shop where I go every day allows me to take my sandwiches before I go to the bank to get some cash.","ID":"142","explanation":"You might like to review If we dont, it wont and wont need to for further information or post a comment.","answers":[{"ID":"1122","answer":"True","correct":"0"},{"ID":"1123","answer":"False","correct":"1"}]},{"question":"2. Samuel Brittain wrote \"If we dont, it wont and wont need to \" in a recent column. He was referring to the fact that if the UK economy grows then the automatic stabilisers will reduce the budget deficit, but if growth is not forthcoming, then the deficit will not contract automatically and that should be welcomed.","ID":"143","explanation":"You might like to review If we dont, it wont and wont need to for further information or post a comment.","answers":[{"ID":"1124","answer":"True","correct":"1"},{"ID":"1125","answer":"False","correct":"0"}]},{"question":"3. A fundamental understanding that you can draw from modern monetary theory is that if there is mass unemployment and real wage cuts reduce the non-government desire to save in the currency of issue then an employment-creating policy would be to target real wage cuts.","ID":"144","explanation":"You might like to review How fiscal policy saved the world for further information or post a comment.","answers":[{"ID":"1133","answer":"False","correct":"0"},{"ID":"1132","answer":"True","correct":"1"}]},{"question":"4. Modern monetary theory tells us that while asset bubbles that drive private sector debt beyond sustainable levels are disruptive, there should be no reason for GDP and employment growth to turn negative.n","ID":"145","explanation":"You might like to review How fiscal policy saved the world for further information or post a comment.","answers":[{"ID":"1135","answer":"False","correct":"0"},{"ID":"1134","answer":"True","correct":"1"}]},{"question":"5. A nation could successfully sustain a fiscal strategy that closed the spending gap left by non-government net saving at all times, irrespective of what other nations were doing.","ID":"146","explanation":"You might like to review How fiscal policy saved the world for further information or post a comment.","answers":[{"ID":"1137","answer":"False","correct":"0"},{"ID":"1136","answer":"True","correct":"1"}]}]}, {"ID":"30","name":"The billy blog Saturday Quiz 29","added_on":"2009-10-17 07:36:02","questions":[{"question":"1. A government that issues its own currency is never in danger of becoming insolvent. However, it loses this sovereignty the moment it borrows in a foreign currency.","ID":"147","explanation":"You might like to review Modern monetary theory in an open economy for further information or post a comment.","answers":[{"ID":"1149","answer":"False","correct":"0"},{"ID":"1148","answer":"True","correct":"1"}]},{"question":"2. A government running a fiscal deficit has to offer sufficiently attractive interest rates on its debt to the private sector which means its borrowing costs rise to market rates. This is contrary to the modern monetary theory insight that deficits drive interest rates down.","ID":"148","explanation":"You might like to review Modern monetary theory in an open economy for further information or post a comment.","answers":[{"ID":"1159","answer":"False","correct":"1"},{"ID":"1158","answer":"True","correct":"0"}]},{"question":"3. Short-term market-driven interest rate movements in a modern monetary economy are the means through which household savings and business investment plans are mediated.","ID":"149","explanation":"You might like to review Studying macroeconomics an exercise in deception for further information or post a comment.","answers":[{"ID":"1153","answer":"False","correct":"1"},{"ID":"1152","answer":"True","correct":"0"}]},{"question":"4. By highlighting the sectoral balances version of national income accounting, modern monetary theory shows us that if the fiscal budget was always balanced and the external sector was always in balance, then there could be no domestic saving.","ID":"150","explanation":"You might like to review Studying macroeconomics an exercise in deception for further information or post a comment.","answers":[{"ID":"1155","answer":"False","correct":"1"},{"ID":"1154","answer":"True","correct":"0"}]},{"question":"5. The RBA governor said this week that \" in the long run, monetary policy is about the value of money that is, prices [but] in the short term, monetary policy changes do affect the real economy, because they affect aggregate demand\". This means that the RBA believes that interest rates have no impact on employment or economic growth over the long run.","ID":"151","explanation":"You might like to review Inflation targeting spells bad fiscal policy for further information or post a comment.","answers":[{"ID":"1157","answer":"False","correct":"0"},{"ID":"1156","answer":"True","correct":"1"}]}]}, {"ID":"31","name":"The billy blog Saturday Quiz 30","added_on":"2009-10-23 23:18:41","questions":[{"question":"1. Maintaining a peg against another currency means that monetary policy and fiscal policy work against each other.","ID":"152","explanation":"Please read When a country is wrecked by neo-liberalism for further information or post a question on the comments page for clarification.","answers":[{"ID":"1187","answer":"False","correct":"0"},{"ID":"1186","answer":"True","correct":"1"}]},{"question":"2. Modern monetary theory tells us that expansionary fiscal policy in an emerging economy can always improve living standards.","ID":"153","explanation":"Please read When a country is wrecked by neo-liberalism for further information or post a question on the comments page for clarification.","answers":[{"ID":"1175","answer":"False","correct":"1"},{"ID":"1174","answer":"True","correct":"0"}]},{"question":"3. The problem with private home mortgages being written in a foreign currency, is that if the home currency depreciates that home owner can end up with negative equity in their homes in terms of the foreign currency.","ID":"154","explanation":"Please read When a country is wrecked by neo-liberalism for further information or post a question on the comments page for clarification.","answers":[{"ID":"1177","answer":"False","correct":"1"},{"ID":"1176","answer":"True","correct":"0"}]},{"question":"4. Given that the US federal government is legally required to issue debt $-for-$ to match its net spending, if foreign countries especially China stopped buying the debt the government would have to cut back its spending proportionally.","ID":"155","explanation":"Please read Landlocked but still swamped by budget hysteria for further information or post a question on the comments page for clarification.","answers":[{"ID":"1183","answer":"False","correct":"1"},{"ID":"1182","answer":"True","correct":"0"}]},{"question":"5. The modern monetary theory statement that governments borrow back their own spending is true but the assumption underlying it is that the purchasers of the debt do not use funds borrowed from their banks to buy the debt.n","ID":"156","explanation":"Please read When a country is wrecked by neo-liberalism for further information or post a question on the comments page for clarification.","answers":[{"ID":"1185","answer":"False","correct":"1"},{"ID":"1184","answer":"True","correct":"0"}]}]}, {"ID":"32","name":"The billy blog Saturday Quiz 31","added_on":"2009-10-31 06:24:59","questions":[{"question":"1. Almost every nation can achieve full employment if they have sufficient foreign reserves.","ID":"157","explanation":"Please read Current accounts and currencies for further information or post a question on the comments page for clarification.","answers":[{"ID":"1199","answer":"False","correct":"1"},{"ID":"1198","answer":"True","correct":"0"}]},{"question":"2. A national government budget surplus results from tax revenue exceeding spending and thus can be seen as \"forced saving\" (unspent private income). A deficit is the opposite and thus undermines total saving. ","ID":"158","explanation":"Please read Current accounts and currencies for further information or post a question on the comments page for clarification.","answers":[{"ID":"1201","answer":"False","correct":"1"},{"ID":"1200","answer":"True","correct":"0"}]},{"question":"3. The Australian central bank (RBA) decision to raise interest rates is designed to increase the rates banks have to pay to attract deposits and thus undermines their capacity to make loans and fuel a renewed credit binge.","ID":"159","explanation":"Please read Being careful not to swear in Dubai for further information or post a question on the comments page for clarification.","answers":[{"ID":"1211","answer":"False","correct":"1"},{"ID":"1210","answer":"True","correct":"0"}]},{"question":"4. A central bank can always maintain zero short-term nominal interest rates.","ID":"160","explanation":"Please read Criminal negligence (n)OTT for further information or post a question on the comments page for clarification.","answers":[{"ID":"1209","answer":"False","correct":"0"},{"ID":"1208","answer":"True","correct":"1"}]},{"question":"5. While the crowding out hypothesis does not apply to budget deficits in a normal range, the fact that bond yields ultimately rise if the bond markets get saturated with government debt confirms that there is an upward effect on interest rates at some point from continued deficits.","ID":"161","explanation":"Please read Criminal negligence (n)OTT for further information or post a question on the comments page for clarification.","answers":[{"ID":"1207","answer":"False","correct":"1"},{"ID":"1206","answer":"True","correct":"0"}]}]}, {"ID":"33","name":"The billy blog Saturday Quiz 32","added_on":"2009-11-06 21:31:55","questions":[{"question":"1. In a fiat monetary system, government borrowing will push the interest rate up.","ID":"162","explanation":"Please read Functional finance and modern monetary theory for further information or post a question on the comments page for clarification.","answers":[{"ID":"1223","answer":"False","correct":"0"},{"ID":"1222","answer":"True","correct":"1"}]},{"question":"2. When the government repays debt it drives the interest rate down.","ID":"163","explanation":"Please read Functional finance and modern monetary theory for further information or post a question on the comments page for clarification.","answers":[{"ID":"1225","answer":"False","correct":"0"},{"ID":"1224","answer":"True","correct":"1"}]},{"question":"3. The central bank has no greater capacity under fixed exchange rates to defend its currency against a short-selling speculative attacks than it has under a system of flexible exchange rates.","ID":"164","explanation":"Please read An international currency? Hopefully not! for further information or post a question on the comments page for clarification.","answers":[{"ID":"1227","answer":"False","correct":"0"},{"ID":"1226","answer":"True","correct":"1"}]},{"question":"4. Within a narrow band, the central bank can always control the short-term interest rate in a fixed exchange rate system because there is never a constraint on the governments ability to add to bank reserves.","ID":"165","explanation":"Please read An international currency? Hopefully not! for further information or post a question on the comments page for clarification.","answers":[{"ID":"1229","answer":"False","correct":"1"},{"ID":"1228","answer":"True","correct":"0"}]},{"question":"5. The Reserve Bank of Australia believes that in the long-run the real economy is not influenced by monetary variables (so interest rate rises do not have real effects). This is consistent with Phelps"s view that workers" inflation expectations converge on the actual inflation rate, and, at the point, the economy is deemed to be at full employment no matter what the actual unemployment rate happens to be.","ID":"166","explanation":"Please read Those bad Keynesians are to blames for further information or post a question on the comments page for clarification.","answers":[{"ID":"1233","answer":"False","correct":"0"},{"ID":"1232","answer":"True","correct":"1"}]}]}, {"ID":"34","name":"The billy blog Saturday Quiz 33","added_on":"2009-11-13 20:53:58","questions":[{"question":"1. A current account surplus drains aggregate demand because the nation is giving away more of its real resources than it is getting back from foreigners.","ID":"167","explanation":"Please read APEC summit the heat must be getting to them for further information or post a question on the comments page for clarification.","answers":[{"ID":"1265","answer":"False","correct":"1"},{"ID":"1264","answer":"True","correct":"0"}]},{"question":"2. Income adjustments would force the government to run a deficit equivalent to 8 per cent of GDP if the private domestic sector was spending less than its income by an amount equivalent to 5 per cent of GDP and the country was running a current account surplus of only 3 per cent of GDP.","ID":"168","explanation":"Please read APEC summit the heat must be getting to them for further information or post a question on the comments page for clarification.","answers":[{"ID":"1267","answer":"False","correct":"1"},{"ID":"1266","answer":"True","correct":"0"}]},{"question":"3. The fundamental flaw in all the mainstream macroeconomic models that construct the the business cycle as being the outcome of shifts in the labour supply is that actual quit behaviour by workers rises during a boom and declines during a recession. ","ID":"169","explanation":"Please read Islands in the sun for further information or post a question on the comments page for clarification.","answers":[{"ID":"1255","answer":"False","correct":"0"},{"ID":"1254","answer":"True","correct":"1"}]},{"question":"4. Australia"s October Labour Force Survey data shows that employment increased by 24,500 thousand persons in the last month by total hours worked in that month fell by about 1.7 per cent. Given GDP growth is now growing again, this means that labour productivity growth (GDP per worker) must have jumped up as well in the last month because less working hours are being required to produce more output.","ID":"170","explanation":"Please read Employment falls better put interest rates up again for further information or post a question on the comments page for clarification.","answers":[{"ID":"1261","answer":"False","correct":"1"},{"ID":"1260","answer":"True","correct":"0"}]},{"question":"5. Imagine the national government ran a surplus (tax revenue greater than spending) last year of say $20 billion and then electronically deposited the sum in a local commercial bank such that it now had a $20 billion bank balance in the private sector. This is one example where a budget surplus would contribute to national saving and allow the government to purchase more next period for a given tax take.","ID":"171","explanation":"Please read Being objective and lying rodents for further information or post a question on the comments page for clarification.","answers":[{"ID":"1263","answer":"False","correct":"1"},{"ID":"1262","answer":"True","correct":"0"}]}]}, {"ID":"35","name":"The billy blog Saturday Quiz 34","added_on":"2009-11-21 05:48:18","questions":[{"question":"1. If a national government builds a road and then tears it up again only to rebuild it again later, there is no net gain in employment and national income the second time round.","ID":"172","explanation":"Please read Lets just focus on inflation for further information or post a question on the comments page for clarification.","answers":[{"ID":"1281","answer":"False","correct":"1"},{"ID":"1280","answer":"True","correct":"0"}]},{"question":"2. Modern monetary theory tells us that the larger is the fiscal deficit the less real resources that will be available for other productive uses.","ID":"173","explanation":"Please read Lets just focus on inflation for further information or post a question on the comments page for clarification.","answers":[{"ID":"1295","answer":"False","correct":"0"},{"ID":"1294","answer":"True","correct":"1"}]},{"question":"3. Like anything in abundance, it is true that when there is more \"money\" in the economy its value declines.","ID":"174","explanation":"Please read Lets just focus on inflation for further information or post a question on the comments page for clarification.","answers":[{"ID":"1285","answer":"False","correct":"1"},{"ID":"1284","answer":"True","correct":"0"}]},{"question":"4. There is the same risk of a generalised inflation arising from a net exports boom as there is from expanding net public spending.","ID":"175","explanation":"Please read I have found an inflation threat for further information or post a question on the comments page for clarification.","answers":[{"ID":"1293","answer":"False","correct":"0"},{"ID":"1292","answer":"True","correct":"1"}]},{"question":"5. The only way that you can have unbalanced external accounts across nations (some countries with surpluses and other deficits) is because the surplus countries desire to hold financial assets denominated in the currency of the deficit countries.","ID":"176","explanation":"Please read I have found an inflation threat for further information or post a question on the comments page for clarification.","answers":[{"ID":"1289","answer":"False","correct":"0"},{"ID":"1288","answer":"True","correct":"1"}]}]}, {"ID":"36","name":"The billy blog Saturday Quiz 35","added_on":"2009-11-27 20:23:38","questions":[{"question":"1. The more reserves the commercial banking system has the more likely it is to lend.","ID":"177","explanation":"Please read An unholy gathering is emerging for further information or post a question on the comments page for clarification.","answers":[{"ID":"1307","answer":"False","correct":"1"},{"ID":"1306","answer":"True","correct":"0"}]},{"question":"2. The money multiplier concept is predicated on the notion that banks only lend when they have reserves and they get them by attracting deposits.","ID":"178","explanation":"Please read An unholy gathering is emerging for further information or post a question on the comments page for clarification.","answers":[{"ID":"1309","answer":"False","correct":"0"},{"ID":"1308","answer":"True","correct":"1"}]},{"question":"3. The saying \"Investment brings forth its own saving\" refers to the fact that the non-government sector is not sovereign in the currency and has to finance its spending.","ID":"179","explanation":"Please read We are in trouble squirrels are falling down holes for further information or post a question on the comments page for clarification.","answers":[{"ID":"1311","answer":"False","correct":"1"},{"ID":"1310","answer":"True","correct":"0"}]},{"question":"4. The private domestic sector overall can never save if there is a current account deficit and the government continually balances its budget.","ID":"180","explanation":"Please read I guess they didnt want to win the war for further information or post a question on the comments page for clarification.","answers":[{"ID":"1315","answer":"False","correct":"0"},{"ID":"1314","answer":"True","correct":"1"}]},{"question":"5. After a downturn where governments have run large budget deficits, the only way to reduce the stockpile of public debt is for the government to run surpluses in the future.","ID":"181","explanation":"Please read The comeback of conservative ideology for further information or post a question on the comments page for clarification.","answers":[{"ID":"1317","answer":"False","correct":"1"},{"ID":"1316","answer":"True","correct":"0"}]}]}, {"ID":"37","name":"The billy blog Saturday Quiz 36","added_on":"2009-12-05 05:51:17","questions":[{"question":"1. Central banks (for example, US Federal Reserve, Reserve Bank of Australia, and the Central Bank of Ireland) conduct monetary policy by setting the short-run interest rate rather than trying to control the money supply which is endogenous.","ID":"182","explanation":"Please read Most bananas are atheists if you want further information and/or post a comment.","answers":[{"ID":"1333","answer":"False","correct":"1"},{"ID":"1332","answer":"True","correct":"0"}]},{"question":"2. An economist who believed in Ricardian Equivalence would argue that the boost of retail sales in Australia following the December stimulus package had nothing to do with the $900 cash handout. Households would have merely saved the handout to pay for future tax rises.","ID":"183","explanation":"Please read Deficits should be cut in a recession. Not! if you want further information and/or post a comment.","answers":[{"ID":"1339","answer":"False","correct":"0"},{"ID":"1338","answer":"True","correct":"1"}]},{"question":"3. When the German constitutional requirement that the federal budget be balanced at all times comes into force, fiscal policy will become pro-cyclical and destabilising.","ID":"184","explanation":"Please read Structural deficits and automatic stabilisers if you want further information and/or post a comment.","answers":[{"ID":"1343","answer":"False","correct":"0"},{"ID":"1342","answer":"True","correct":"1"}]},{"question":"4. The reason estimates of structural budget deficits are to be treated with suspicion relates to the fact that typically the implicit estimates of potential GDP are too optimistic.","ID":"185","explanation":"Please read Structural deficits and automatic stabilisers if you want further information and/or post a comment.","answers":[{"ID":"1345","answer":"False","correct":"1"},{"ID":"1344","answer":"True","correct":"0"}]},{"question":"5. The introduction of an employment guarantee where the federal government offers a minimum wage job to anyone who wanted one would require a modest increase in the budget deficit but there would never be a question that a sovereign government could not afford this program.","ID":"186","explanation":"Please read Structural deficits and automatic stabilisers if you want further information and/or post a comment.","answers":[{"ID":"1347","answer":"False","correct":"1"},{"ID":"1346","answer":"True","correct":"0"}]}]}, {"ID":"38","name":"The billy blog Saturday Quiz 37","added_on":"2009-12-12 10:32:03","questions":[{"question":"1. Assume a national government on June 30 in some financial year has an excess of revenue over spending of $100 billion. At the end of the day it decides to \"store\" that excess by purchasing $100 billion of financial assets (for example, shares in a telecommunications company). In terms of stock-flow consistency, the government has created a surplus of $100 billion and built an equivalent valued sovereign fund.","ID":"187","explanation":"Please see The comedy begins for more information or post a comment.","answers":[{"ID":"1377","answer":"False","correct":"1"},{"ID":"1376","answer":"True","correct":"0"}]},{"question":"2. Modern monetary theory which is recognises the sovereignty of the national government in its own currency, considers that the government risks losing this sovereignty if it borrows from foreign governments.","ID":"188","explanation":"Please see The comedy begins for more information or post a comment.","answers":[{"ID":"1373","answer":"False","correct":"1"},{"ID":"1372","answer":"True","correct":"0"}]},{"question":"3. If the European monetary system revised the Maastricht Treaty and eliminated the Stability and Growth pact conditions on the size of fiscal deficits and public debt relative to GDP then the Euro nations would once again be equivalent to (for example) the USA or Japan.","ID":"189","explanation":"Please see A Greek tragedy for more information or post a comment.","answers":[{"ID":"1367","answer":"False","correct":"1"},{"ID":"1366","answer":"True","correct":"0"}]},{"question":"4. In the November Labour Force Survey results for Australia we read that full-time employment growth accounted for nearly 100 per cent of the net jobs growth and monthly hours of work jumped upwards. This means that underemployment is falling.","ID":"190","explanation":"Please see Maybe the unemployment rate has peaked for more information or post a comment.","answers":[{"ID":"1363","answer":"False","correct":"1"},{"ID":"1362","answer":"True","correct":"0"}]},{"question":"5. Article 101 of the Maastricht Treaty forbids the monetary financing for public deficits using overdraft facilities or any other type of credit facility with the European Central Bank (or with the central banks of the Member States). However, commercial banks in member states can purchase government bonds in their countries with European Central Bank cash under certain conditions. ","ID":"191","explanation":"Please see A Greek tragedy for more information or post a comment.","answers":[{"ID":"1361","answer":"False","correct":"0"},{"ID":"1360","answer":"True","correct":"1"}]}]}, {"ID":"39","name":"The billy blog Saturday Quiz 38","added_on":"2009-12-19 15:19:05","questions":[{"question":"1. A 10 per cent increase in bank reserves will increase the banks" capacity to make loans by a lesser amount because the banks always keep a minimum volume of reserves to allow the payments system to function efficiently.","ID":"192","explanation":"Please see Building bank reserves will not expand credit for more information or post a comment.","answers":[{"ID":"1391","answer":"False","correct":"1"},{"ID":"1390","answer":"True","correct":"0"}]},{"question":"2. When bank reserves overall are in excess of the minimum requirements determined by the banks, the commercial banks can profitably eliminate the excess by lending between themselves on the interbank market although this behaviour will drive the overnight interest rate down.","ID":"193","explanation":"Please see Building bank reserves will not expand credit for more information or post a comment.","answers":[{"ID":"1403","answer":"False","correct":"1"},{"ID":"1402","answer":"True","correct":"0"}]},{"question":"3. Under certain conditions, increasing bank credit can be inflationary. In this regard, as the world economy improves, the central bank will eventually need to reduce the reserves in the banking system to constrain the ability of banks to lend.","ID":"194","explanation":"Please see Building bank reserves is not inflationary for more information or post a comment.","answers":[{"ID":"1395","answer":"False","correct":"1"},{"ID":"1394","answer":"True","correct":"0"}]},{"question":"4. Central banks have a choice when attempting to stabilise aggregate demand and control inflation. They can set the price of money (via the interest rate) or control the volume of money. In recent years, they have been setting the price and allowing the volume to fluctuate.","ID":"195","explanation":"Please see Lost in a macroeconomics textbook again for more information or post a comment.","answers":[{"ID":"1399","answer":"False","correct":"1"},{"ID":"1398","answer":"True","correct":"0"}]},{"question":"5. Quantitative easing involves buying one type of financial asset (private bonds holdings) in exchange for another (reserve balances) with no change in net financial assets in the private sector. This may be inflationary, however, if the increased demand for long maturity assets held in the private sector reduces long-term interest rates and the demand for loans increases.","ID":"196","explanation":"Please see Quantitative easing 101 for more information or post a comment.","answers":[{"ID":"1401","answer":"False","correct":"0"},{"ID":"1400","answer":"True","correct":"1"}]}]}, {"ID":"40","name":"The billy blog Saturday Quiz 39","added_on":"2009-12-25 20:43:29","questions":[{"question":"1. If a national government brings in a fiscal rule that the budget is required to be in balance at all times then discretionary fiscal policy and monetary policy together will always be pro-cyclical.","ID":"197","explanation":"Please see On voluntary constraints that undermine public purpose for more information or post a comment.","answers":[{"ID":"1435","answer":"False","correct":"0"},{"ID":"1434","answer":"True","correct":"1"}]},{"question":"2. The imposition of a fiscal rule at the national government level that the budget is required to be in balance at all times would eliminate budget swings driven by the automatic stabilisers.","ID":"198","explanation":"Please see On voluntary constraints that undermine public purpose for more information or post a comment.","answers":[{"ID":"1433","answer":"False","correct":"1"},{"ID":"1432","answer":"True","correct":"0"}]},{"question":"3. The paradox of thrift tells us that recessions are inevitable unless the government can persuade households to save less.","ID":"199","explanation":"Please see When ideology blinds us to the solution for more information or post a comment.","answers":[{"ID":"1419","answer":"False","correct":"1"},{"ID":"1418","answer":"True","correct":"0"}]},{"question":"4. While it is true that the central bank can always set the interest rate it desires, credit ratings agencies can still force governments to pay higher returns on its borrowings at longer maturities by downgrading the quality of the sovereign debt.","ID":"200","explanation":"Please see Time to outlaw the credit rating agencies for more information or post a comment.","answers":[{"ID":"1437","answer":"False","correct":"1"},{"ID":"1436","answer":"True","correct":"0"}]},{"question":"5. There is worry that the large increase in bank reserves in various countries that have resulted from the fiscal and monetary policy efforts will be lend out and create inflation as the recovery gathers pace. However, the only way that they will be reduced is through a combination of government transactions with the non-government sector including running a budget surplus; issuing public debt; the central bank selling gold or foreign exchange etc.","ID":"201","explanation":"Please see Bernanke should quit or be sacked for more information or post a comment.","answers":[{"ID":"1431","answer":"False","correct":"0"},{"ID":"1430","answer":"True","correct":"1"}]},{"question":"Bonus Question: Santa Claus is actually a secret agent for the socialist welfare state (by giving handouts to everyone) and should be subject to fiscal rules which would force him/her to tax all children the same amount as the gift so as to teach them fiscal prudence.","ID":"202","explanation":"My anti-Xmas statement.","answers":[{"ID":"1429","answer":"Surely if you want a chance at 6 out of 6","correct":"1"},{"ID":"1428","answer":"False","correct":"0"},{"ID":"1427","answer":"True","correct":"0"}]}]}, {"ID":"41","name":"Quiz 2010 1","added_on":"2010-01-01 20:55:21","questions":[{"question":"1. Assume inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting. It is then true that if government spending increases by $X dollars and private investment and exports are unchanged then nominal income will continue growing until the sum of taxation revenue, import spending and household saving rises by $X dollars.","ID":"203","explanation":"Please see Spending multipliers for more information or post a comment.","answers":[{"ID":"1451","answer":"False","correct":"0"},{"ID":"1450","answer":"True","correct":"1"}]},{"question":"2. The principle of opportunity cost at a macroeconomic level is violated by the existence of mass unemployment.","ID":"204","explanation":"Please see Do not learn economics from a newspaper for more information or post a comment.","answers":[{"ID":"1453","answer":"False","correct":"0"},{"ID":"1452","answer":"True","correct":"1"}]},{"question":"3. The Taylor rule sets interest rates according to the notion that the short-term real interest rate should reflect a mark-up or mark-down on the real natural interest rate. The add or subtract factors are determined by weights on the inflation and output gaps, respectively. Typically the output gap is calculated based on estimates of a natural rate of unemployment with determines the potential output level. If the natural rate of unemployment is above the true full employment level of unemployment, then the Taylor rule will always lead to deflationary monetary policy settings even when the central bank considers it is conducting a neutral policy stance.","ID":"205","explanation":"Please see Monetary policy was not to blame for more information or post a comment.","answers":[{"ID":"1455","answer":"False","correct":"0"},{"ID":"1454","answer":"True","correct":"1"}]},{"question":"4. The IMF frequently publishes GDP per capita figures for nations and for comparative purposes it converts the local currencies into US dollar equivalents. The measures however are misleading because they will show a nation is suffering a decline in living standards relative to other countries on this ranking if the local currency appreciates against the US dollar even if there is no change in domestic command over resources in the local currency.","ID":"206","explanation":"Please see The year ends badly and then for more information or post a comment.","answers":[{"ID":"1457","answer":"False","correct":"1"},{"ID":"1456","answer":"True","correct":"0"}]},{"question":"5. As soon as adult individuals adopt social norms and start making decisions together which impact on each person in the group, mainstream economic theory becomes irrelevant and the competitive model of decision making and optimisation loses authority. It is only when individuals behave as psychopaths (according to the clinical diagnosis of psychologists) that the mainstream economic theory of choice has any traction at all.","ID":"207","explanation":"Please see Do not learn economics from a newspaper for more information or post a comment.","answers":[{"ID":"1461","answer":"False","correct":"0"},{"ID":"1460","answer":"True","correct":"1"}]}]}, {"ID":"42","name":"Quiz 2010 2","added_on":"2010-01-08 19:34:13","questions":[{"question":"1. With the EMU creating a fixed nominal exchange rate system across member states and monetary policy fixed by the ECB, fiscal policy is the only policy left to a member country to deal with a crisis. The problem then is that its ability to use fiscal policy is constrained by the Maastricht Treaty.","ID":"208","explanation":"Please see Espaa se est muriendo for more information or post a comment.","answers":[{"ID":"1475","answer":"False","correct":"1"},{"ID":"1474","answer":"True","correct":"0"}]},{"question":"2. The Euro monetary system could not possibly be an Optimal Currency Area because wages are not flexible across the member states.","ID":"209","explanation":"Please see Espaa se est muriendo for more information or post a comment.","answers":[{"ID":"1479","answer":"False","correct":"1"},{"ID":"1478","answer":"True","correct":"0"}]},{"question":"3. It is often argued that the central bank sets the short-run interest rates but the private market demand and supply sets the long-term interest rate. This is particularly important in the current debate that bond markets will close a government down if it senses the deficit is too large. However the reality is that the central bank can control interest rates at all yields by issuing debt at different maturities on a fixed yield basis. The only reason that private market forces have any influence is because the government voluntarily constrains itself to issue debt $-for-$ on an auction basis to match net spending.nn","ID":"210","explanation":"Please see Financial markets are mostly unproductive for more information or post a comment.","answers":[{"ID":"1481","answer":"False","correct":"0"},{"ID":"1480","answer":"True","correct":"1"}]},{"question":"4. If the government manages to balance its budget over a business cycle then the private domestic sector balance (I - S) will on average be in deficit exactly equal to the average current account deficit over the same period. In other words, if a nation has a current account deficit, then a balanced budget over the business cycle will force the private domestic sector overall to be building debt over that same cycle.","ID":"211","explanation":"Please see One should become more radical as one grows older for more information or post a comment.","answers":[{"ID":"1483","answer":"False","correct":"0"},{"ID":"1482","answer":"True","correct":"1"}]},{"question":"5. The private domestic sector can save overall even if the government deficit is in surplus as long as net exports are positive. This is the Norwegian situation. But typically with net exports negative, the government has to run deficits to enable to private domestic sector to save.","ID":"212","explanation":"Please see One should become more radical as one grows older for more information or post a comment.","answers":[{"ID":"1485","answer":"False","correct":"1"},{"ID":"1484","answer":"True","correct":"0"}]}]}, {"ID":"43","name":"Quiz 2010 3","added_on":"2010-01-15 20:24:06","questions":[{"question":"1. In a 100-percent reserve banking system, some depositors may agree to fixed-term deposits to allow the bank to lend their money for the duration of the term. While this would allow for some credit creation the system would not face the same risks that burden the \\\"fractional reserve deposit\\\" system because the banking system would always be able to pay depositors on demand (or when the fixed-terms expired).","ID":"213","explanation":"Please see 100-percent reserve banking and state banks for more information or post a comment.","answers":[{"ID":"1527","answer":"False","correct":"1"},{"ID":"1526","answer":"True","correct":"0"}]},{"question":"2. Bank reserves play a vital part in the monetary system. One important function they serve is to allow banks to meet short-term demand for credit in times when they are finding it hard to attract deposits.","ID":"214","explanation":"Please see 100-percent reserve banking and state banks for more information or post a comment.","answers":[{"ID":"1517","answer":"False","correct":"1"},{"ID":"1516","answer":"True","correct":"0"}]},{"question":"3. Open market operations (buying and selling bonds in the secondary markets) allow the central market to control the money supply because a sale of bonds will be exchanged with the non-government sector for money and vice versa in the case of a central bank purchase of bonds. These are examples of vertical transactions in modern monetary theory.","ID":"215","explanation":"Please see 100-percent reserve banking and state banks for more information or post a comment.","answers":[{"ID":"1511","answer":"False","correct":"1"},{"ID":"1510","answer":"True","correct":"0"}]},{"question":"4. The claim by mainstream economists that a generalised real wage cut will increase employment at the macroeconomic level because firms will face lower costs and thus output will expand, relies on the assumption that the factors that determine aggregate demand (expenditure decisions) are independent of the factors that determine aggregate supply (output and pricing decisions). In practice this assumption is false.","ID":"216","explanation":"Please see What causes mass unemployment? for more information or post a comment.","answers":[{"ID":"1521","answer":"False","correct":"0"},{"ID":"1520","answer":"True","correct":"1"}]},{"question":"5. Bank reserves are maintained to ensure that all the cheques written every day clear when presented. If a bank doesn"t have enough reserves then cheques drawn against it will bounce.","ID":"217","explanation":"Please see 100-percent reserve banking and state banks for more information or post a comment.","answers":[{"ID":"1529","answer":"False","correct":"1"},{"ID":"1528","answer":"True","correct":"0"}]}]}, {"ID":"44","name":"Quiz 2010 4","added_on":"2010-01-22 11:15:48","questions":[{"question":"1. A currency board requires a nation to have reserves of the anchor currency equivalent to each unit of local currency they issue at the pegged rate. However the national government in the particular country is still the monopoly issuer of its own currency.","ID":"218","explanation":"Please see The further down the food chain you go, the more the zealots take over for more information or post a comment.","answers":[{"ID":"1541","answer":"False","correct":"0"},{"ID":"1540","answer":"True","correct":"1"}]},{"question":"2. A nation that runs a currency board has to seek ways to ensure exports exceed imports to avoid a future of domestic stagnation because the monetary base has to shrink every time net exports are negative.","ID":"219","explanation":"Please see The further down the food chain you go, the more the zealots take over for more information or post a comment.","answers":[{"ID":"1559","answer":"False","correct":"0"},{"ID":"1558","answer":"True","correct":"1"}]},{"question":"3. It is clear that an open market purchase by the central bank in the secondary bond markets gives the private sector more cash which means the monetary base expands if nothing else happens.","ID":"220","explanation":"Please see The complacent students sit and listen to some of that for more information or post a comment.","answers":[{"ID":"1551","answer":"False","correct":"0"},{"ID":"1550","answer":"True","correct":"1"}]},{"question":"4. The Reserve Bank of Australia currently seeks to maintain a policy interest rate of 3.75 per cent as its statement of monetary policy. As a consequence, unless it was prepared to pay the same rate on overnight reserves held with it by the commercial banks, then any government net spending has to be offset with debt-issuance.","ID":"221","explanation":"Please see The complacent students sit and listen to some of that for more information or post a comment.","answers":[{"ID":"1555","answer":"False","correct":"0"},{"ID":"1554","answer":"True","correct":"1"}]},{"question":"5. There are millions of idle dollars sitting in bank reserve accounts at present as a result of the so-called central bank liquidity operations. While bank loans create deposits and the banks then add necessary reserves as part of a separate operation, it is clear that the huge stock of idle reserves, currently make it easier for banks to lend if they can find credit-worthy customers.","ID":"222","explanation":"Please see Its a hard road for more information or post a comment.","answers":[{"ID":"1557","answer":"False","correct":"1"},{"ID":"1556","answer":"True","correct":"0"}]}]}, {"ID":"45","name":"Quiz 2010 5","added_on":"2010-01-29 21:42:06","questions":[{"question":"1. Estimates of the sacrifice ratio that define a disinflation episode induced by tighter monetary policy as some finite period after which real output growth returns to its prior trend will always overstate the true cost of the policy because they ignore the persistence and hysteresis effects.","ID":"223","explanation":"Please see The Great Moderation myth for more information or post a comment.","answers":[{"ID":"1571","answer":"False","correct":"1"},{"ID":"1570","answer":"True","correct":"0"}]},{"question":"2. The IMF is forecasting that the US economy will grow by 2.7 per cent in real terms in 2010 and moderate to 2.4 per cent in 2011. At the end of 2009, the official unemployment rate in the US was 10 per cent. If real output per person employed grows constantly by 1.5 per cent in each of these years; the labour force grows by 1.2 per cent in 2010 and 1.3 per cent in 2011; and firms make no changes to average weekly hours overall, then you would expect the unemployment rate at the end of 2011 to be:","ID":"224","explanation":"Please see What do the IMF growth projections mean? for more information or post a comment.","answers":[{"ID":"1572","answer":"9.6 per cent","correct":"0"},{"ID":"1573","answer":"10 per cent","correct":"0"},{"ID":"1574","answer":"10.4 per cent","correct":"1"},{"ID":"1575","answer":"None of these","correct":"0"}]},{"question":"3. The Quantity Theory of Money cannot possibly be used to predict the movement in the general price level in an economy that has 10 per cent unemployment because firms do not face any wage pressures.","ID":"225","explanation":"Please see Questions and answers 1 for more information or post a comment.","answers":[{"ID":"1581","answer":"False","correct":"1"},{"ID":"1580","answer":"True","correct":"0"}]},{"question":"4. Quantitative easing of the type the Bank of England is currently engaged in cannot be compared to a net fiscal injection because it creates no new net financial assets in the currency of issue.","ID":"226","explanation":"Please see Questions and answers 1 for more information or post a comment.","answers":[{"ID":"1583","answer":"False","correct":"0"},{"ID":"1582","answer":"True","correct":"1"}]},{"question":"5. While the central bank unambiguously sets the short-term interest rate, it can also control all yields along the maturity curve by announcing explicit ceilings for yields on longer-maturity government debt and then offering an infinite capacity to purchase such bonds at prices consistent with the ceilings. This statement is clearly false because ratings agencies can influence spreads on government debt.n","ID":"227","explanation":"Please see Things that bothered me today for more information or post a comment.","answers":[{"ID":"1585","answer":"False","correct":"1"},{"ID":"1584","answer":"True","correct":"0"}]}]}, {"ID":"46","name":"Quiz 2010 6","added_on":"2010-02-05 20:16:11","questions":[{"question":"1. When a country is running an external deficit and the national currency issuing government achieves a balanced budget averaged from peak to peak of the business cycle, the private domestic sector will be","ID":"228","explanation":"Please see Lhorreur economique for more information or post a comment.","answers":[{"ID":"1609","answer":"spending more than it is earning with a deficit on average a bit lower than the average current account (external) deficit over the cycle.","correct":"0"},{"ID":"1608","answer":"spending more than it is earning with a deficit on average equal to the average current account (external) deficit over the cycle.","correct":"1"},{"ID":"1607","answer":"spending more than it is earning with a deficit on average a bit higher than the average current account (external) deficit over the cycle.","correct":"0"},{"ID":"1610","answer":"all you can really say is that it will be increasing its indebtedness.","correct":"0"}]},{"question":"2. Monetary policy is of some importance because interest rates changes are the way in which saving (rising when interest rates rise) and investment (falling when interest rates rise) adjust to ensure that aggregate demand doesn"t decline when the non-government sector tries to increase its saving ratio and consumption falls. The problem is that central banks haven"t adequately allowed the rates to adjust enough because they have been targetting inflation.","ID":"229","explanation":"Please see Lhorreur economique for more information or post a comment.","answers":[{"ID":"1600","answer":"False","correct":"1"},{"ID":"1599","answer":"True","correct":"0"}]},{"question":"3. While a sovereign government is not revenue constrained and voluntarily constrains itself to borrow to cover its net spending position, it remains the case that by substituting its spending for the borrowed funds it reduces the private capacity to borrow and spend.","ID":"230","explanation":"Please see When youve got friends like this Part 2 for more information or post a comment.","answers":[{"ID":"1602","answer":"False","correct":"1"},{"ID":"1601","answer":"True","correct":"0"}]},{"question":"4. It will be appropriate for national governments around the world to withdraw their discretionary stimulus packages once their private sector spending recovers. Otherwise inflation will result.","ID":"231","explanation":"Please see When youve got friends like this Part 2 for more information or post a comment.","answers":[{"ID":"1604","answer":"False","correct":"1"},{"ID":"1603","answer":"True","correct":"0"}]},{"question":"5. The Greek government can become insolvent and be forced into default if bond markets \\\"stop\\\" funding their spending. The same logic applies to Ireland, Spain and Portugal but not to Germany because the latter has a strong net export surplus.","ID":"232","explanation":"Please see On human bondage for more information or post a comment.","answers":[{"ID":"1606","answer":"False","correct":"1"},{"ID":"1605","answer":"True","correct":"0"}]}]}, {"ID":"47","name":"Quiz 2010 7","added_on":"2010-02-12 20:53:15","questions":[{"question":"1. Aggregate demand is a crucial determinant of employment and output at each point in time, but the output that has to be purchased is the outcome of long-run trend factors such as technological change and population growth.","ID":"233","explanation":"Please see My Sunday media nightmare for more information or post a comment.","answers":[{"ID":"1622","answer":"False","correct":"1"},{"ID":"1621","answer":"True","correct":"0"}]},{"question":"2. It is true that all official interest rates (which include the short-term policy target rate and all longer-maturity rates on government bonds) can be controlled by the central bank within the operational structure and tools at their disposable. However, the government doesn"t pursue this option because they want higher interest rates to be set by the private capital markets so that they can dampen aggregate demand and avoid inflation.","ID":"234","explanation":"Please see Who is in charge? for more information or post a comment.","answers":[{"ID":"1626","answer":"False","correct":"1"},{"ID":"1625","answer":"True","correct":"0"}]},{"question":"3. One of the problems facing the Eurozone is that Greece, Ireland and Spain enjoyed rapid growth and allowed their real wage levels to rise faster than labour productivity. They thus lost competitiveness to Germany which contained real wages growth by a program of deregulation. Given that the member countries could not rely on depreciation of their exchange rate to offset this competitive loss their domestic wage adjustment now has to be more painful.","ID":"235","explanation":"Please see Doomed from the start for more information or post a comment.","answers":[{"ID":"1636","answer":"False","correct":"1"},{"ID":"1635","answer":"True","correct":"0"}]},{"question":"4. The change in the net worth of the non-government sector when the government increases its net spending is invariant to government issuing debt $-for-$ to match the net spending rise.","ID":"236","explanation":"Please see Why history matters for more information or post a comment.","answers":[{"ID":"1632","answer":"False","correct":"0"},{"ID":"1631","answer":"True","correct":"1"}]},{"question":"5. The expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance because then excess reserves are drained and the purchasing power is taken out of the monetary system.","ID":"237","explanation":"Please see Why history matters for more information or post a comment.","answers":[{"ID":"1634","answer":"False","correct":"1"},{"ID":"1633","answer":"True","correct":"0"}]}]}, {"ID":"48","name":"Quiz 2010 8","added_on":"2010-02-19 20:32:20","questions":[{"question":"1. Eurozone nations with strong export positions such as Germany are more like a sovereign nation such as the UK or the US than they they are like Greece when it comes to dealing with a bank run within their own borders.","ID":"238","explanation":"Please see Europe bailout or exit? for more information or post a comment.","answers":[{"ID":"1661","answer":"False","correct":"1"},{"ID":"1660","answer":"True","correct":"0"}]},{"question":"2. The Chinese government can always convert its US dollar holdings back into its own currency, although the increase the supply of US dollars into the foreign exchange market would provoke a depreciation of the US dollar.","ID":"239","explanation":"Please see A modern monetary theory lullaby for more information or post a comment.","answers":[{"ID":"1650","answer":"False","correct":"1"},{"ID":"1649","answer":"True","correct":"0"}]},{"question":"3. Assume there is a situation where private bond markets are driving up yields on long-maturity public bonds. The central bank can always maintain whatever yields the government desires at every maturity. In this situation the central bank could hold yields constant but would be paying:","ID":"240","explanation":"Please see The vandals are gathering for more information or post a comment.","answers":[{"ID":"1651","answer":"more for the bonds than the private markets were prepared to pay.","correct":"1"},{"ID":"1652","answer":"less for the bonds than the private markets were prepared to pay.","correct":"0"},{"ID":"1653","answer":"there is not enough information to answer. It depends on the maturity in question.","correct":"0"}]},{"question":"4. While continuous national governments deficits are possible if the non-government sector desires to save, they do imply continuously rising public debt levels as a percentage of GDP.","ID":"241","explanation":"Please see A modern monetary theory lullaby for more information or post a comment.","answers":[{"ID":"1655","answer":"False","correct":"1"},{"ID":"1654","answer":"True","correct":"0"}]},{"question":"5. A budget deficit that is equivalent to 5 per cent of GDP is always more expansionary in terms of nominal GDP growth than a budget deficit that is equivalent to 3 per cent of GDP but the actual number should not become the policy focus.","ID":"242","explanation":"Please see A modern monetary theory lullaby for more information or post a comment.","answers":[{"ID":"1657","answer":"False","correct":"1"},{"ID":"1656","answer":"True","correct":"0"}]}]}, {"ID":"49","name":"Quiz 2010 9","added_on":"2010-02-26 21:17:46","questions":[{"question":"1. Government spending which is accompanied by a bond sale to the private sector adds less to aggregate demand than would be the case if there was no bond sale.","ID":"243","explanation":"Please see Questions and answers 2 for more information or post a comment.","answers":[{"ID":"1673","answer":"False","correct":"1"},{"ID":"1672","answer":"True","correct":"0"}]},{"question":"2. If the external balance is always in surplus, then the government can safely run a surplus and not impede economic growth. However, this option is only available to a few nations because not all nations can run external surpluses.","ID":"244","explanation":"Please see Questions and answers 2 for more information or post a comment.","answers":[{"ID":"1675","answer":"False","correct":"1"},{"ID":"1674","answer":"True","correct":"0"}]},{"question":"3. In the same way the spending multiplier indicates the extent to which GDP rises when there is a given rise in government spending, the tax multiplier captures the impact of rising tax rates on GDP as people reduce their labour supply because of the disincentives associated with taxation.","ID":"245","explanation":"Please see Pushing the fantasy barrow for more information or post a comment.","answers":[{"ID":"1677","answer":"False","correct":"1"},{"ID":"1676","answer":"True","correct":"0"}]},{"question":"4. Assume the government increases spending by $100 billion in the each of the next three years from now. Economists estimate the spending multiplier to be 1.5 and the impact is immediate and exhausted in each year. They also estimate the tax multiplier to be equal to 1 and the current tax rate is equal to 30 per cent (30 cents in the $). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"246","explanation":"Please see Pushing the fantasy barrow for more information or post a comment.","answers":[{"ID":"1699","answer":"$450 billion","correct":"1"},{"ID":"1698","answer":"$315 billion","correct":"0"},{"ID":"1697","answer":"$150 billion","correct":"0"},{"ID":"1696","answer":"$135 billion","correct":"0"}]},{"question":"5. In a stock-flow consistent macroeconomics, we have to always trace the impact of flows during a period on the relevant stocks at the end of the period. Accordingly, government and private investment spending are two examples of flows that adds to the stock of aggregate demand which in turn impacts on GDP.","ID":"247","explanation":"Please see Yummy at first then you get fat! for more information or post a comment.","answers":[{"ID":"1683","answer":"False","correct":"1"},{"ID":"1682","answer":"True","correct":"0"}]}]}, {"ID":"50","name":"Quiz 2010 10","added_on":"2010-03-05 21:08:03","questions":[{"question":"1. In the current macroeconomic debate, considerable attention is being focused on the public debt to GDP ratio with some mainstream economists claiming that a ratio of 80 per cent is a dangerous threshold that should not be passed. They therefore advocate that governments run primary surpluses (taxation revenue in excess of non-interest government spending) to start reducing the debt ratio. Modern monetary theory tells us that while a currency-issuing government running a deficit can never reduce the debt ratio it doesn"t matter anyway because such a government faces no risk of insolvency.","ID":"248","explanation":"Please see Size of deficit 101 for more information or post a comment.","answers":[{"ID":"1742","answer":"False","correct":"1"},{"ID":"1741","answer":"True","correct":"0"}]},{"question":"2. Russia was forced to default on its outstanding public debt because it faced a major collapse of oil prices in world markets which meant it could no longer raise the foreign currency necessary to repay the loans via net exports. But the defaults were ultimately due to the currency peg against the US dollar that they voluntarily put in place.","ID":"249","explanation":"Please see Hyperbole and outright lies for more information or post a comment.","answers":[{"ID":"1744","answer":"False","correct":"1"},{"ID":"1743","answer":"True","correct":"0"}]},{"question":"3. Imagine that macroeconomic policy is geared towards keeping real GDP growth on trend. Assume this rate of growth is 3 per cent per annum. If labour productivity is growing at 2 per cent per annum and the labour force is growing at 1.5 per cent per annum and the average working week is constant in hours, then this policy regime will result in:","ID":"250","explanation":"Please see GDP growth but black clouds on the horizon for more information or post a comment.","answers":[{"ID":"1747","answer":"a rising unemployment rate.","correct":"1"},{"ID":"1746","answer":"an unchanged unemployment rate.","correct":"0"},{"ID":"1745","answer":"a declining unemployment rate.","correct":"0"}]},{"question":"4. Students are taught that the macroeconomic income determination system can be thought of as a bath tub with the current GDP being the water level. The drain plug can be thought of as saving, imports and taxation payments (the so-called leakages from the expenditure system) while the taps can be thought of as investment, government spending and exports (the so-called exogenous injections into the spending system). This analogy is valid because GDP will be unchanged as long as the flows into the bath are equal to the flows out of it which is tantamount to saying the the spending gap left by the leakages is always filled by the injections.","ID":"251","explanation":"Please see Saturday Quiz February 27, 2010 answers and discussion for more information or post a comment.","answers":[{"ID":"1749","answer":"False","correct":"1"},{"ID":"1748","answer":"True","correct":"0"}]},{"question":"5. Assume the current public debt to GDP ratio is 100 per cent and that the nominal interest rate and the inflation rate remain constant and zero. Under these circumstances it is impossible to reduce a public debt to GDP ratio, using an austerity package if the rise in the primary surplus to GDP ratio is always exactly offset by negative GDP growth rate of the same percentage value.n","ID":"252","explanation":"Please see Size of deficit 101 for more information or post a comment.n","answers":[{"ID":"1751","answer":"False","correct":"0"},{"ID":"1750","answer":"True","correct":"1"}]}]}, {"ID":"51","name":"Quiz 2010 11","added_on":"2010-03-12 07:51:56","questions":[{"question":"1. From the US National Accounts, you find that in 2006, the share of Personal consumption expenditure in real GDP was 69.9 per cent and by 2008 it had fallen to 69.8 per cent. Similarly, the share of Gross private domestic investment on real GDP was 17.2 per cent in 2006 and by 2008 had fallen to 14.9 per cent (and further to 11.8 per cent in 2009). The net export deficit over the same period (2006 to 2008) fell from -5.7 per cent of real GDP to -4.9 per cent in 2008. Finally, the share of Government consumption expenditures and gross investment in real GDP rose from 18.8 per cent in 2006 to 18.9 per cent in 2008 (and 19.7 per cent in 2009). These relative changes tell you that real GDP was lower in 2008 compared to 2006 because the increase in Government spending and the falling negative contribution of net exports were not sufficient to offset the declining contribution from consumption and investment.","ID":"253","explanation":"Please see Saturday Quiz March 6, 2010 answers and discussion for more information or post a comment.","answers":[{"ID":"1784","answer":"False","correct":"1"},{"ID":"1783","answer":"True","correct":"0"}]},{"question":"2. The US Senate has recently debated whether to extend unemployment benefits given the lack of job opportunities currently available. One side of the debate says the proposal will reduce growth because it reduces the incentive to search for work although the evidence for this impact is weak. The other side of the debate says the proposal will maintain and perhaps stimulate growth because it will maintain spending capacity of those without work. Even if the former effect was strong, the proposal would not harm growth at present.","ID":"254","explanation":"Please see Extending unemployment benefits an omen for more information or post a comment.","answers":[{"ID":"1786","answer":"False","correct":"0"},{"ID":"1785","answer":"True","correct":"1"}]},{"question":"3. The suggestion to create a European Monetary Fund is motivated by the desire to prevent sovereign defaults among member countries who are having trouble covering their net spending positions with market-sourced finance. The solvency risk is however sourced in the restrictions imposed on deficit and debt ratios by the Stability and Growth Pact which member states voluntarily agreed to.","ID":"255","explanation":"Please see Not the EMF anything but the EMF! for more information or post a comment.","answers":[{"ID":"1777","answer":"False","correct":"1"},{"ID":"1776","answer":"True","correct":"0"}]},{"question":"4. In the February Labour Force data for Australia released last Thursday, we learned that employment grew by only 400 in net terms during the month of February. Other highlights were that unemployment rose by 10,700 and that the labour force participation rate fell by 0.1 per cent indicating a rise in the proportion leaving the labour force. Taken together this data tells you that:","ID":"256","explanation":"Please see The white hot labour market just went a tad cool for more information or post a comment.","answers":[{"ID":"1778","answer":"The labour force grew faster than employment but not as fast the working age population.","correct":"1"},{"ID":"1779","answer":"The working age population grew faster than employment and offset the decline in the labour force arising from the drop in the participation rate.","correct":"0"},{"ID":"1780","answer":"The labour force grew faster than employment but you cannot tell what happened to the working age population from the information provided.","correct":"0"}]},{"question":"5. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"257","explanation":"Please see Saturday Quiz March 6, 2010 answers and discussion for more information or post a comment.","answers":[{"ID":"1782","answer":"False","correct":"1"},{"ID":"1781","answer":"True","correct":"0"}]}]}, {"ID":"52","name":"Quiz 2010 12","added_on":"2010-03-19 22:26:03","questions":[{"question":"1. If the external sector overall is in deficit, it is still possible for the private domestic sector and government sector to run surpluses and each pay down its debt as long as GDP growth is fast enough (the technical condition is that the rate of GDP growth has to be faster than the real interest rate).","ID":"258","explanation":"Please read - Today started out well but then went downhill - for further guidance or ask a question in the comments section.","answers":[{"ID":"1787","answer":"True","correct":"0"},{"ID":"1788","answer":"False","correct":"1"}]},{"question":"2. Federal government debt (where there is currency sovereignty) is not really a liability because the government can just roll it over continuously and thus they never have to pay it back. This is different to a household, which not only has to service its debt but also has to repay them at the due date.","ID":"259","explanation":"Please read - Hyperdeflation, followed by rampant inflation - for further guidance or ask a question in the comments section.","answers":[{"ID":"1805","answer":"False","correct":"1"},{"ID":"1804","answer":"True","correct":"0"}]},{"question":"3. The Greek crisis would be significantly eased if it could improve its tax collection arrangements to ensure that it had more financing available to cover its spending.","ID":"260","explanation":"Please read - Hyperdeflation, followed by rampant inflation - for further guidance or ask a question in the comments section.","answers":[{"ID":"1793","answer":"True","correct":"1"},{"ID":"1794","answer":"False","correct":"0"}]},{"question":"4. The term \\\"beggar-my-neighbour\\\" strategy describes a situation where a nation pushes its excess supply onto its trading partners is more applicable to Germany than China in the current situation.","ID":"261","explanation":"Please read - China is not the problem - for further guidance or ask a question in the comments section.","answers":[{"ID":"1795","answer":"True","correct":"1"},{"ID":"1796","answer":"False","correct":"0"}]},{"question":"5. Even though the money multiplier found in macroeconomics textbooks is a flawed description of the way the monetary system operates, having some positive minimum reserve requirements does constrain credit creation activities of the private banks more than if you have no requirements other than the rule that balances have to be non-zero.","ID":"262","explanation":"Please read - Oh no Bernanke is loose and those greenbacks are everywhere - for further guidance or ask a question in the comments section.","answers":[{"ID":"1797","answer":"True","correct":"0"},{"ID":"1798","answer":"False","correct":"1"}]},{"question":"6. My statement that the British government could do its citizens a favour by assuming absolute power and suspending the national election for three years.nnnn","ID":"263","explanation":"Please read - Hyperdeflation, followed by rampant inflation - for further guidance or ask a question in the comments section.","answers":[{"ID":"1799","answer":"(a) Was clearly serious and finally gives away the agenda that MMT is about totalitarianism.","correct":"0"},{"ID":"1800","answer":"(b) Means I represent a danger to freedom loving citizens everywhere.","correct":"0"},{"ID":"1801","answer":"(c) Was a joke!","correct":"1"}]}]}, {"ID":"53","name":"Quiz 2010 13","added_on":"2010-03-26 06:17:20","questions":[{"question":"1. While the US government is sovereign in its own currency, increased nominal expenditure on health care will still reduce the real resources available for other uses and so political choices have to be made.","ID":"264","explanation":"Please see The US should have universal public health care for further discussion and/or post a comment.","answers":[{"ID":"1817","answer":"False","correct":"1"},{"ID":"1816","answer":"True","correct":"0"}]},{"question":"2. In 2001, Japan defied the ratings agencies who had downgraded their sovereign debt. They refused to alter their fiscal commitments despite constant pressure to cut the deficit. Given that countries such as Greece and Portugal are unlikely to be expelled from the EMU if they continue to exceed the Stability and Growth Pact conditions, they should similarly resist the demands of the ratings agencies for increased fiscal austerity and thus spread their fiscal adjustment over a longer period which would inflict less damage on their nations.","ID":"265","explanation":"Please see The bullies and the bullied for further discussion and/or post a comment.","answers":[{"ID":"1837","answer":"False","correct":"1"},{"ID":"1836","answer":"True","correct":"0"}]},{"question":"3. Fiscal rules such as are embodied in the Stability and Growth Pact of the EMU will continually create conditions of slower growth because they deprive the government of fiscal flexibility to support aggregate demand when necessary.","ID":"266","explanation":"Please see Clowns to the left, jokers to the right for further discussion and/or post a comment.","answers":[{"ID":"1839","answer":"False","correct":"1"},{"ID":"1838","answer":"True","correct":"0"}]},{"question":"4. It is clear that EMU nations cannot use the exchange rate mechanism to adjust for trading imbalances arising from a lack of competitiveness within the Eurozone. With fiscal and monetary policy tied by the EMU arrangements, the only adjustment mechanism left is to reduce wages and prices to restore competitiveness. While harsh this will ultimately improve the competitive position of Greece, Portugal, Ireland and other nations currently in external deficit.","ID":"267","explanation":"Please see The bullies and the bullied for further discussion and/or post a comment.","answers":[{"ID":"1833","answer":"False","correct":"1"},{"ID":"1832","answer":"True","correct":"0"}]},{"question":"5. If the US budget deficit keeps rising to meet the need for more fiscal stimulus, it would have to bear the political costs of a rising public debt ratio. This is one of the reasons the US government is talking about reducing net spending.","ID":"268","explanation":"Please see Clowns to the left, jokers to the right for further discussion and/or post a comment.","answers":[{"ID":"1829","answer":"False","correct":"1"},{"ID":"1828","answer":"True","correct":"0"}]}]}, {"ID":"54","name":"Quiz 2010 13","added_on":"2010-04-02 22:01:20","questions":[{"question":"1. Greece would have to undergo a period of austerity even if the Greek government left the EMU, restored its currency and renegotiated all Euro debts into the drachma (that is, defaulted). This is because investors would be reluctant to purchase Greek government debt and they would have to reduce their net spending accordingly.","ID":"269","explanation":"Please see EMU posturing provides no durable solution for further discussion and/or post a comment.","answers":[{"ID":"1861","answer":"False","correct":"1"},{"ID":"1860","answer":"True","correct":"0"}]},{"question":"2. If policy makers use the NAIRU to compute the decomposition between structural and cyclical budget balances, then if the estimated NAIRU is above the true full employment unemployment rate, the estimated impact of the automatic stabilisers will always be biased downwards.","ID":"270","explanation":"Please see Another economics department to close for further discussion and/or post a comment.","answers":[{"ID":"1859","answer":"False","correct":"0"},{"ID":"1858","answer":"True","correct":"1"}]},{"question":"3. The fact that large scale quantitative easing conducted by central banks in Japan in 2001 and now in the UK and the USA 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.","ID":"271","explanation":"Please see Operation twist then and now for further discussion and/or post a comment.","answers":[{"ID":"1853","answer":"False","correct":"1"},{"ID":"1852","answer":"True","correct":"0"}]},{"question":"4. The central bank could always use quantitative easing to control interest rates at any maturity along the yield curve if it desired. The only thing stopping it are political constraints.","ID":"272","explanation":"Please see Operation twist then and now for further discussion and/or post a comment.","answers":[{"ID":"1863","answer":"False","correct":"1"},{"ID":"1862","answer":"True","correct":"0"}]},{"question":"5. Central bank balance sheet management aimed at controlling the yields on public debt at all maturities may not have much impact on the term structure during periods of high inflation.","ID":"273","explanation":"Please see Operation twist then and now for further discussion and/or post a comment.","answers":[{"ID":"1865","answer":"False","correct":"0"},{"ID":"1864","answer":"True","correct":"1"}]}]}, {"ID":"55","name":"Quiz 2010 14","added_on":"2010-04-09 07:58:56","questions":[{"question":"1. The statement that lending is capital-constrained rather than reserve constrained would not apply if the banks had to maintain a reserve ratio of 100 per cent.","ID":"274","explanation":"For more information please read - Lending is capital- not reserve-constrained - or post a comment.","answers":[{"ID":"1885","answer":"False","correct":"1"},{"ID":"1884","answer":"True","correct":"0"}]},{"question":"2. Any person on income support benefits provided by the national government are living of the hard work of those who pay taxes. We consider this is part of being a civilised society.","ID":"275","explanation":"Please read the blog - I just found out state kleptocracy is the problem for further information or post a comment.","answers":[{"ID":"1868","answer":"True","correct":"1"},{"ID":"1869","answer":"False","correct":"0"}]},{"question":"3. A central bank can influence bank lending by charging an increasing price for providing its reserves to the commercial banks while maintaining its target monetary policy rate.","ID":"276","explanation":"Please read the blog - Lending is capital- not reserve-constrained - for further information or post a comment.","answers":[{"ID":"1894","answer":"False","correct":"1"},{"ID":"1893","answer":"True","correct":"0"}]},{"question":"4. Has been withdrawn!","ID":"277","explanation":"","answers":[{"ID":"1896","answer":"Withdrawn","correct":"0"},{"ID":"1895","answer":"Withdrawn","correct":"1"}]},{"question":"5. While a national government that issues its own currency is not revenue-constrained it is possible that the demands on the budget posed by the need to provide pensions and health care to an increasing proportion of the population will be impossible due to inflation.","ID":"278","explanation":"For more information please read - US federal reserve governor is part of the problem - or post a comment.","answers":[{"ID":"1889","answer":"False","correct":"0"},{"ID":"1888","answer":"True","correct":"1"}]}]}, {"ID":"56","name":"Quiz 2010 15","added_on":"2010-04-16 10:26:48","questions":[{"question":"1. Mainstream economists use the notion of \\\"crowding out\\\" to argue that public spending squeezes out private spending and results in a less efficient allocation of resources overall. Modern Monetary Theory (MMT) argues that the mainstream economists do not understand that the government only borrows what it has already spent. But MMT still recognise that crowding out can occur.","ID":"279","explanation":"For more information please read - Deficits are here to stay get used to it - or post a comment.","answers":[{"ID":"1924","answer":"False","correct":"0"},{"ID":"1923","answer":"True","correct":"1"}]},{"question":"2. One interpretation of the sectoral balances decomposition of the national accounts, is that it is impossible for all governments (in all nations) to run public surpluses without impairing growth because it is likely that the private domestic sector in some countries will desire to save overall.","ID":"280","explanation":"For more information please read - Deficits are here to stay get used to it - or post a comment.","answers":[{"ID":"1914","answer":"False","correct":"1"},{"ID":"1913","answer":"True","correct":"0"}]},{"question":"3. A rising government deficit will always allow the private domestic sector to increase its saving in nominal terms.","ID":"281","explanation":"For more information please read - Deficits are here to stay get used to it - or post a comment.","answers":[{"ID":"1918","answer":"False","correct":"1"},{"ID":"1917","answer":"True","correct":"0"}]},{"question":"4. A rising government deficit indicates an expansionary shift in policy and the challenge is to calibrate that expansion to ensure nominal demand growth does not exceed the real capacity of the economy to respond by increasing real output.","ID":"282","explanation":"For more information please read - Deficits are here to stay get used to it - or post a comment.","answers":[{"ID":"1920","answer":"False","correct":"1"},{"ID":"1919","answer":"True","correct":"0"}]},{"question":"5. The lack of a close correspondence between the growth of bank reserves and the growth in the stock of money is evidence that credit creation has been tightly constrained by the recession.","ID":"283","explanation":"For more information please read - Japan just wait your days are numbered - or post a comment.","answers":[{"ID":"1922","answer":"False","correct":"0"},{"ID":"1921","answer":"True","correct":"1"}]}]}, {"ID":"57","name":"Quiz 2010 16","added_on":"2010-04-23 20:33:43","questions":[{"question":"1. Higher levels of taxation permit the government to spend more.","ID":"284","explanation":"For more information please read - Taxpayers do not fund anything - or post a comment.","answers":[{"ID":"1936","answer":"False","correct":"0"},{"ID":"1935","answer":"True","correct":"1"}]},{"question":"2. If there is a current account deficit, and the domestic private sector seeks to increase its saving as a percentage of GDP, then income adjustments will ensure the government budget is in deficit.","ID":"285","explanation":"For more information please read - The Fiscal Sustainability Teach-In and Counter-Conference - or post a comment.","answers":[{"ID":"1938","answer":"False","correct":"0"},{"ID":"1937","answer":"True","correct":"1"}]},{"question":"3. For nations facing strong terms of trade (such as Australia), if the net exports boom is strong enough to push the budget into surplus and the economy to full employment then it is sensible for the government to accumulate the surpluses in a sovereign fund to create more space for non-inflationary spending in the future.","ID":"286","explanation":"For more information please read - A mining boom will not reduce the need for public deficits - or post a comment.","answers":[{"ID":"1942","answer":"False","correct":"1"},{"ID":"1941","answer":"True","correct":"0"}]},{"question":"4. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.","ID":"287","explanation":"For more information please read - When a huge pack of lies is barely enough - or post a comment.","answers":[{"ID":"1946","answer":"False","correct":"0"},{"ID":"1945","answer":"True","correct":"1"}]},{"question":"5. The reason estimates of structural budget deficits are to be treated with suspicion relates to the fact that typically the implicit estimates of potential GDP are too optimistic.","ID":"288","explanation":"For more information please read - The Fiscal Sustainability Teach-In and Counter-Conference - or post a comment.","answers":[{"ID":"1950","answer":"False","correct":"1"},{"ID":"1949","answer":"True","correct":"0"}]}]}, {"ID":"58","name":"Quiz 2010 17","added_on":"2010-04-29 19:55:02","questions":[{"question":"1. The payment by the central bank of a positive interest rate on overnight reserves held by the commercial banks means that the former no longer has to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements in place when answering).","ID":"289","explanation":"For more information please read - Understanding central bank operations - or post a comment.","answers":[{"ID":"1968","answer":"Maybe","correct":"1"},{"ID":"1967","answer":"False","correct":"0"},{"ID":"1966","answer":"True","correct":"0"}]},{"question":"2. The payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend increase the overall level of reserves held by the latter (ignore any reserve requirements in place when answering).","ID":"290","explanation":"For more information please read - Understanding central bank operations - or post a comment.","answers":[{"ID":"1977","answer":"False","correct":"0"},{"ID":"1976","answer":"True","correct":"1"},{"ID":"1978","answer":"Maybe","correct":"0"}]},{"question":"3. The payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend to increase the volume of broad money in the system (ignore any reserve requirements in place when answering).","ID":"291","explanation":"For more information please read - Understanding central bank operations - or post a comment.","answers":[{"ID":"1983","answer":"Maybe","correct":"0"},{"ID":"1982","answer":"False","correct":"1"},{"ID":"1981","answer":"True","correct":"0"}]},{"question":"4. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.","ID":"292","explanation":"For more information please read - What the hell is a government solvency constraint? - or post a comment.","answers":[{"ID":"1989","answer":"False","correct":"1"},{"ID":"1988","answer":"True","correct":"0"}]},{"question":"5. Taxation provides the necessary resources to a sovereign national government to allow it to maintain full employment","ID":"293","explanation":"For more information please read - What the hell is a government solvency constraint? - or post a comment.","answers":[{"ID":"1995","answer":"Maybe","correct":"0"},{"ID":"1994","answer":"False","correct":"0"},{"ID":"1993","answer":"True","correct":"1"}]}]}, {"ID":"59","name":"Quiz 2010 18","added_on":"2010-05-07 21:27:02","questions":[{"question":"1. Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP.","ID":"294","explanation":"For more information please read - Fiscal sustainability and ratio fever - or post a comment.","answers":[{"ID":"2043","answer":"Maybe","correct":"0"},{"ID":"2042","answer":"False","correct":"0"},{"ID":"2041","answer":"True","correct":"1"}]},{"question":"2. The public debt ratio will always fall when economic growth is positive because the primary deficit falls due to the automatic stabilisers (more tax revenue, less welfare spending) and the denominator GDP rises.","ID":"295","explanation":"For more information please read - Fiscal sustainability and ratio fever - or post a comment.","answers":[{"ID":"2046","answer":"Maybe","correct":"0"},{"ID":"2045","answer":"False","correct":"1"},{"ID":"2044","answer":"True","correct":"0"}]},{"question":"3. It would be impossible for the Reserve Bank of Australia to directly purchase Australian Treasury debt to facilitate the federal government"s budget deficit while still targeting its policy rate of 4.5 per cent.","ID":"296","explanation":"For more information please read - Fiscal sustainability and ratio fever - or post a comment.","answers":[{"ID":"2049","answer":"Maybe","correct":"1"},{"ID":"2048","answer":"False","correct":"0"},{"ID":"2047","answer":"True","correct":"0"}]},{"question":"4. One important lesson to be drawn from Modern Monetary Theory (MMT), which is overlooked in the public call for austerity programs, is that when economic growth resumes, the automatic stabilisers work in a counter-cyclical fashion and ensure that the government budget balance returns to its appropriate level.","ID":"297","explanation":"For more information please read - Fiscal sustainability and ratio fever - or post a comment.","answers":[{"ID":"2037","answer":"Maybe","correct":"0"},{"ID":"2036","answer":"False","correct":"1"},{"ID":"2035","answer":"True","correct":"0"}]},{"question":"5. The money multiplier concept suggests that changes in the monetary base are transmitted by commercial bank lending in multiplied changes in the money supply. The fact is that in a modern monetary economy the monetary base adjusts to the changes in the money supply.","ID":"298","explanation":"For more information please read - Teaching macroeconomics students the facts - or post a comment.","answers":[{"ID":"2034","answer":"Maybe","correct":"0"},{"ID":"2033","answer":"False","correct":"0"},{"ID":"2032","answer":"True","correct":"1"}]}]}, {"ID":"60","name":"Quiz 2010 19","added_on":"2010-05-14 21:39:09","questions":[{"question":"1. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"299","explanation":"For more information please read - Doublethink - or post a comment.","answers":[{"ID":"2083","answer":"A nation can run a current account deficit with a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"2082","answer":"A nation can run a current account deficit with an offsetting government sector surplus, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"2081","answer":"A nation can run a current account deficit with an offsetting government sector surplus, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"2084","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]},{"question":"2. If the Greek government decided to leave the EMU and restore their own currency they would have no solvency problems and could avoid an austerity program.","ID":"300","explanation":"For more information please read - Doublethink - or post a comment.","answers":[{"ID":"2054","answer":"True","correct":"0"},{"ID":"2055","answer":"False","correct":"1"},{"ID":"2056","answer":"Maybe","correct":"0"}]},{"question":"3. The IMF claims that \\\"Greece needs to rely on internal devaluation\\\" and the austerity programs are designed to deflate nominal wages and prices which is claimed will make the economy more competitive as long as real unit labour costs fall faster than their trading partners. However, ignoring whether the logic is correct or not, which of the following propositions must also follow if the IMF logic is to follow:","ID":"301","explanation":"For more information please read - Doublethink - or post a comment.","answers":[{"ID":"2077","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and employment remain constant or grow.","correct":"0"},{"ID":"2078","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and employment must grow.","correct":"0"},{"ID":"2079","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and what happens to employment is irrelevant.","correct":"1"},{"ID":"2080","answer":"None of the above","correct":"0"}]},{"question":"4. One possible problem with running continuous budget deficits is that the spending builds up over time and with inflation eventually becoming the risk that has to be managed.","ID":"302","explanation":"For more information please read - Life in Europe another day, another (futile) bailout - or post a comment.","answers":[{"ID":"2068","answer":"Maybe","correct":"0"},{"ID":"2067","answer":"False","correct":"1"},{"ID":"2066","answer":"True","correct":"0"}]},{"question":"5. One of the reasons, mainstream economists argue for lower taxes is that they believe they distort the allocation of resources by changing the rates of return on different uses of capital (and labour). In the 2010-11 Australian Federal Budget, the Australian government introduced a Resource Super Profits Tax on mining companies as a way of sharing the gains made from excess mining profits across all Australians. Leaving aside the arguments that the government does not need revenue to spend, a typical mainstream economist would conclude that this tax will reduce mining investment.n","ID":"303","explanation":"For more information please read - Federal budget 2010-11 a sad document - or post a comment.n","answers":[{"ID":"2074","answer":"Maybe","correct":"0"},{"ID":"2073","answer":"False","correct":"1"},{"ID":"2072","answer":"True","correct":"0"}]}]}, {"ID":"61","name":"Quiz 2010 20","added_on":"2010-05-21 21:04:39","questions":[{"question":"1. Estonia and Latvia both run currency boards which requires that the nation have sufficient foreign reserves to match the outstanding central bank liabilities (reserves and cash outstanding). This system ensures 100 per cent convertibility but is highly deflationary unless the country runs external surpluses.","ID":"304","explanation":"For more information please read - A fiscal consolidation plan - or post a comment.","answers":[{"ID":"2102","answer":"Maybe","correct":"0"},{"ID":"2101","answer":"False","correct":"0"},{"ID":"2100","answer":"True","correct":"1"}]},{"question":"2. From the perspective of Modern Monetary Theory (MMT), mass unemployment can arise from workers demanding too high a nominal wage in relation to the inflation rate.","ID":"305","explanation":"For more information please read - No wages breakout in Australia evident - or post a comment.","answers":[{"ID":"2105","answer":"Maybe","correct":"0"},{"ID":"2104","answer":"False","correct":"0"},{"ID":"2103","answer":"True","correct":"1"}]},{"question":"3. A Eurozone nation that runs a persistent current account deficit cannot sustain rising living standards over time given that the ECB chooses to maintain rigid control of the inflation rate.","ID":"306","explanation":"For more information please read - Rescue packages and iron boots - or post a comment.","answers":[{"ID":"2117","answer":"Unlikely","correct":"1"},{"ID":"2116","answer":"False","correct":"0"},{"ID":"2115","answer":"True","correct":"0"}]},{"question":"4. A sovereign national government can run a balanced budget over the business cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will mirror the external balance. That means a country running an external deficit will have an increasingly indebted private domestic sector.","ID":"307","explanation":"For more information please read - Naked Keynesianism - or post a comment.","answers":[{"ID":"2111","answer":"Maybe","correct":"0"},{"ID":"2110","answer":"False","correct":"0"},{"ID":"2109","answer":"True","correct":"1"}]},{"question":"5. If nominal wages keep pace with inflation which is accelerating at the same rate as labour productivity is growing then there is no shift in the wage share in GDP.","ID":"308","explanation":"For more information please read - No wages breakout in Australia evident - or post a comment.","answers":[{"ID":"2114","answer":"Maybe","correct":"0"},{"ID":"2113","answer":"False","correct":"0"},{"ID":"2112","answer":"True","correct":"1"}]}]}, {"ID":"62","name":"Quiz 2010 21","added_on":"2010-05-28 18:10:00","questions":[{"question":"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 will typically be:","ID":"309","explanation":"For more information please read - Fiscal policy worked evidence - or post a comment.","answers":[{"ID":"2153","answer":"difficult to assess because the Treasury forward estimates are subject to forecasting inaccuracy.","correct":"0"},{"ID":"2151","answer":"biased downwards thus indicating, at any point in the business cycle, that the government fiscal stance is less expansionary than it actually is.","correct":"0"},{"ID":"2152","answer":"biased upwards thus indicating, at any point in the business cycle, that the government fiscal stance is more expansionary than it actually is.","correct":"1"}]},{"question":"2. Rising public debt levels at constant interest rates increase the volume of interest servicing payments that have to be made. These payments will:","ID":"310","explanation":"For more information please read - Saturday Quiz May 22, 2010 answers and discussion - or post a comment.","answers":[{"ID":"2141","answer":"not reduce the room $-for-$ for other non-inflationary discretionary deficit spending because increasing imports will keep opening the spending gap that has to be \\\"filled\\\".","correct":"1"},{"ID":"2140","answer":"reduce the capacity of the private sector to save because they will require cuts backs in the deficit to support the repayments.","correct":"0"},{"ID":"2139","answer":"reduce the room $-for-$ for other non-inflationary discretionary deficit spending because they will \\\"fill up the spending gap\\\" more quickly.nn","correct":"0"}]},{"question":"3. Under a fiat monetary system, the absence of currency convertibility means:","ID":"311","explanation":"For more information please read - A modern monetary theory lullaby - or post a comment.","answers":[{"ID":"2145","answer":"there is no reason for people to hold currency as a hedge against gold price falls.n","correct":"0"},{"ID":"2146","answer":"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.","correct":"1"},{"ID":"2147","answer":"that the currency is only convertible into government bonds rather than gold.","correct":"0"}]},{"question":"4. When a sovereign government issues debt it logically:","ID":"312","explanation":"For more information please read - Functional finance and modern monetary theory - or post a comment.","answers":[{"ID":"2156","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"},{"ID":"2155","answer":"has no impact on the overall holdings of assets held by the non-government sector $-for-$","correct":"1"},{"ID":"2154","answer":"increases the assets that are held by the non-government sector $-for-$.nn","correct":"0"}]},{"question":"5. Rising government bond yields for new issues indicate:","ID":"313","explanation":"For more information please read - Will we really pay higher interest rates? - or post a comment.","answers":[{"ID":"2162","answer":"that government spending is increasing the cost of borrowing for private investors.","correct":"0"},{"ID":"2161","answer":"that bond prices are falling in response to demand.","correct":"1"},{"ID":"2160","answer":"that government spending is becoming more expensive.nn","correct":"0"}]}]}, {"ID":"63","name":"Quiz 2010 22","added_on":"2010-06-04 07:25:14","questions":[{"question":"1. In a fixed coupon government bond auction, the higher is the demand for the bonds","ID":"315","explanation":"","answers":[{"ID":"2196","answer":"the lower the yields will be at that asset maturity but this tells us nothing about the effect of budget deficits on short-term interest rates","correct":"1"},{"ID":"2195","answer":"the lower the yields will be at that asset maturity which suggests that higher budget deficits will eventually drive short-term interest rates down","correct":"0"},{"ID":"2194","answer":"the higher the yields will be at that asset maturity which suggests that higher budget deficits will eventually drive short-term interest rates down","correct":"0"}]},{"question":"2. A sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues","ID":"316","explanation":"","answers":[{"ID":"2198","answer":"the greater is non-government wealth held in the form of public debt.","correct":"1"},{"ID":"2197","answer":"the less is the volume of investment funds in the non-government sector that can be used for other investments.","correct":"0"},{"ID":"2199","answer":"the more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"}]},{"question":"3. When the government borrows from the non-government sector it eventually has to pay the bonds back on maturity. This will","ID":"317","explanation":"","answers":[{"ID":"2202","answer":"not be inflationary because the sovereign government just has to credit the bank accounts of those who hold the bonds to repay them.","correct":"0"},{"ID":"2201","answer":"be inflationary if the government payments to bond holders at maturity add more to nominal aggregate demand than the real economy can support given other policy settings.","correct":"1"},{"ID":"2200","answer":"be inflationary if by the time the bonds mature the economy is growing strongly so there will be too much money floating about.","correct":"0"}]},{"question":"5. In a situation where the private domestic sector decides to lift its saving ratio we cannot conclude that the national government has to increase its net spending (deficit) to avoid employment losses.","ID":"319","explanation":"","answers":[{"ID":"2188","answer":"True","correct":"1"},{"ID":"2189","answer":"False ","correct":"0"},{"ID":"2190","answer":"Maybe","correct":"0"}]},{"question":"4. When an external deficit and public deficit coincide, there must be a private sector deficit, which means that governments can only really run budget deficits safely to support a private sector surplus, when net exports are strong.","ID":"318","explanation":"","answers":[{"ID":"2205","answer":"Maybe","correct":"0"},{"ID":"2204","answer":"False","correct":"1"},{"ID":"2203","answer":"True","correct":"0"}]}]}, {"ID":"64","name":"Quiz 2010 23","added_on":"2010-06-04 07:30:19","questions":[{"question":"1. In a fiat monetary system (for example, US or Australia) with an on-going external deficit, if you desire the domestic private sector to reduce its overall debt levels without employment losses, then you have to support the national government continually increasing the budget deficit in line with the private de-leveraging process.","ID":"320","explanation":"","answers":[{"ID":"2206","answer":"True","correct":"0"},{"ID":"2207","answer":"False","correct":"0"},{"ID":"2208","answer":"Maybe","correct":"1"}]},{"question":"2. Sovereign funds do not store budget surpluses as national savings. They just account for assets that the government has bought in the same way that the property records of, say, the public schools and hospitals record holdings of other public assets accumulated through government spending.","ID":"321","explanation":"","answers":[{"ID":"2209","answer":"True","correct":"1"},{"ID":"2210","answer":"False","correct":"0"},{"ID":"2211","answer":"Maybe","correct":"0"}]},{"question":"3. The massive build-up of Chinese holdings of US government debt has allowed US citizens to enjoy a higher material standard of living at the expense of the residents of China.","ID":"322","explanation":"","answers":[{"ID":"2212","answer":"True","correct":"1"},{"ID":"2213","answer":"False","correct":"0"},{"ID":"2214","answer":"Maybe","correct":"0"}]},{"question":"4. Short-term interest rates are set by the central bank while the fiscal strategy manifests in tax and spending decisions by the government. Whereas the private sector cannot directly influence the interest rate target being set it can determine the size of the budget deficit at any point in time.","ID":"323","explanation":"","answers":[{"ID":"2215","answer":"True","correct":"1"},{"ID":"2216","answer":"False","correct":"0"},{"ID":"2217","answer":"Maybe","correct":"0"}]},{"question":"5. If employment growth matches the pace of growth in the civilian population (people above 15 years of age) then the economy will experience a constant unemployment rate as long as participation rates do not change.","ID":"324","explanation":"","answers":[{"ID":"2226","answer":"Maybe","correct":"0"},{"ID":"2225","answer":"False","correct":"0"},{"ID":"2224","answer":"True","correct":"1"}]}]}, {"ID":"65","name":"Quiz 2010 24","added_on":"2010-06-18 15:19:19","questions":[{"question":"1. The only way that you can have unbalanced external accounts across nations (some countries with surpluses and other deficits) is because the surplus countries desire to hold financial assets denominated in the currency of the deficit countries.","ID":"325","explanation":"","answers":[{"ID":"2227","answer":"True","correct":"1"},{"ID":"2228","answer":"False","correct":"0"},{"ID":"2229","answer":"Maybe","correct":"0"}]},{"question":"2. Like anything in abundance, it is true that when there is more \\\"money\\\" in the economy its value declines.","ID":"326","explanation":"","answers":[{"ID":"2246","answer":"Maybe","correct":"1"},{"ID":"2245","answer":"False","correct":"0"},{"ID":"2244","answer":"True","correct":"0"}]},{"question":"3. If a national government builds a road and then tears it up again only to rebuild it again later, there is no net gain in employment and national income the second time round.","ID":"327","explanation":"","answers":[{"ID":"2233","answer":"True","correct":"0"},{"ID":"2234","answer":"False","correct":"1"}]},{"question":"4. The imposition of a fiscal rule at the national government level that the budget is required to be in balance at all times would eliminate budget swings driven by the automatic stabilisers.","ID":"328","explanation":"","answers":[{"ID":"2240","answer":"Maybe","correct":"0"},{"ID":"2239","answer":"False","correct":"1"},{"ID":"2238","answer":"True","correct":"0"}]},{"question":"5. The private domestic sector can save overall even if the government deficit is in surplus as long as net exports are positive. But typically with net exports negative, the government has to run deficits to enable to private domestic sector to save overall.","ID":"329","explanation":"","answers":[{"ID":"2241","answer":"True","correct":"1"},{"ID":"2242","answer":"False","correct":"0"},{"ID":"2243","answer":"Maybe","correct":"0"}]}]}, {"ID":"66","name":"Quiz 2010 25","added_on":"2010-06-25 20:08:26","questions":[{"question":"1. Assume inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting. It is then true that if government spending increases by $X dollars and private investment and exports are unchanged then nominal income will continue growing until the sum of taxation revenue, import spending and household saving rises by $X dollars.","ID":"330","explanation":"","answers":[{"ID":"2247","answer":"True","correct":"1"},{"ID":"2248","answer":"False","correct":"0"},{"ID":"2249","answer":"Maybe","correct":"0"}]},{"question":"2. Bank reserves are maintained to ensure that all the cheques written every day clear when presented. If a bank doesn"t have enough reserves then cheques drawn against it will bounce.","ID":"331","explanation":"","answers":[{"ID":"2250","answer":"True","correct":"0"},{"ID":"2251","answer":"False","correct":"1"},{"ID":"2252","answer":"Maybe","correct":"0"}]},{"question":"3. While a sovereign government is not revenue constrained and voluntarily constrains itself to borrow to cover its net spending position, it remains the case that by substituting its spending for the borrowed funds it reduces the private capacity to borrow and spend.","ID":"332","explanation":"","answers":[{"ID":"2253","answer":"True","correct":"0"},{"ID":"2254","answer":"False","correct":"1"},{"ID":"2255","answer":"Maybe","correct":"0"}]},{"question":"4. The crucial difference between a monetary system based on the gold standard world and a fiat currency monetary is:","ID":"333","explanation":"","answers":[{"ID":"2256","answer":"that under the former system, excessive national government spending led to inflation.","correct":"0"},{"ID":"2257","answer":"that under the former system, the national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"2258","answer":"that under the former system, the national government could not use net spending to achieve full employment.","correct":"0"}]},{"question":"5. When the national government"s budget balance moves into deficit:","ID":"334","explanation":"","answers":[{"ID":"2259","answer":"nnit is a sign that the government is trying to stimulate the economy.nn","correct":"0"},{"ID":"2260","answer":"it is a sign that the government is worried that unemployment is rising.","correct":"0"},{"ID":"2261","answer":"you cannot conclude anything about the government"s policy intentions.","correct":"1"}]}]}, {"ID":"67","name":"Quiz 2010 26","added_on":"2010-06-30 15:51:38","questions":[{"question":"1. The private domestic sector can save overall even if the government budget balance is in surplus as long as net exports are positive.","ID":"335","explanation":"","answers":[{"ID":"2280","answer":"False","correct":"1"},{"ID":"2279","answer":"True","correct":"0"}]},{"question":"2. Central bankers are talking about the possible need for more quantitative easing to ease the aggregate demand losses associated with the implementation of fiscal austerity programs. However QE cannot be compared to a net fiscal injection because it creates no new net financial assets in the currency of issue.","ID":"336","explanation":"","answers":[{"ID":"2265","answer":"True","correct":"1"},{"ID":"2266","answer":"False","correct":"0"},{"ID":"2267","answer":"Maybe","correct":"0"}]},{"question":"3. The expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance because then excess reserves are drained and the purchasing power is taken out of the monetary system.","ID":"337","explanation":"","answers":[{"ID":"2268","answer":"True","correct":"0"},{"ID":"2269","answer":"False","correct":"1"},{"ID":"2270","answer":"Maybe","correct":"0"}]},{"question":"4. The change in the net worth of the non-government sector when the government increases its net spending is invariant to government issuing debt $-for-$ to match the net spending rise.","ID":"338","explanation":"","answers":[{"ID":"2271","answer":"True","correct":"1"},{"ID":"2272","answer":"False","correct":"0"},{"ID":"2273","answer":"Maybe","correct":"0"}]},{"question":"5. While continuous national governments deficits are possible if the non-government sector desires to save, they do imply continuously rising public debt levels as a percentage of GDP.","ID":"339","explanation":"","answers":[{"ID":"2283","answer":"Maybe","correct":"0"},{"ID":"2282","answer":"False","correct":"1"},{"ID":"2281","answer":"True","correct":"0"}]}]}, {"ID":"68","name":"Quiz 2010 27","added_on":"2010-07-09 18:51:11","questions":[{"question":"1. A budget deficit that is equivalent to 5 per cent of GDP always signals a more expansionary fiscal intent from government than a budget deficit outcome that is equivalent to 3 per cent of GDP.n","ID":"340","explanation":"","answers":[{"ID":"2284","answer":"True","correct":"0"},{"ID":"2285","answer":"False","correct":"1"},{"ID":"2286","answer":"Maybe","correct":"0"}]},{"question":"2. Government spending which is accompanied by a bond sale to the private sector adds less to aggregate demand than would be the case if there was no bond sale.","ID":"341","explanation":"","answers":[{"ID":"2287","answer":"True","correct":"0"},{"ID":"2288","answer":"False","correct":"1"},{"ID":"2289","answer":"Maybe","correct":"0"}]},{"question":"3. If the external balance is always in surplus, then the government can safely run a surplus and not impede economic growth.","ID":"342","explanation":"","answers":[{"ID":"2290","answer":"True","correct":"0"},{"ID":"2291","answer":"False","correct":"1"}]},{"question":"4. Assume the current public debt to GDP ratio is 100 per cent and that the nominal interest rate and the inflation rate remain constant and zero. Under these circumstances it is impossible to reduce a public debt to GDP ratio, using an austerity package if the rise in the primary surplus to GDP ratio is always exactly offset by negative GDP growth rate of the same percentage value.","ID":"343","explanation":"","answers":[{"ID":"2292","answer":"True","correct":"1"},{"ID":"2293","answer":"False","correct":"0"},{"ID":"2294","answer":"Maybe","correct":"0"}]},{"question":"5. The latest Australian Bureau of Statistics data shows that total hours worked in June 2010 fell while part-time employment (and total employment) grew. Unemployment stayed more or less constant. This signals rising underemployment.","ID":"344","explanation":"","answers":[{"ID":"2295","answer":"True","correct":"0"},{"ID":"2296","answer":"False","correct":"0"},{"ID":"2297","answer":"Maybe","correct":"1"}]}]}, {"ID":"69","name":"Quiz 2010 28","added_on":"2010-07-16 09:57:11","questions":[{"question":"1. The National Accounting identity says that total spending is the sum of household consumption, private investment, government spending and net exports. To understand this in terms of a stock-flow consistent macroeconomics, where we have to always trace the impact of flows during a period on the relevant stocks at the end of the period, we would interpret the spending components as flows add to the stock of aggregate demand which in turn impacts on the final production (Gross Domestic Product).","ID":"345","explanation":"","answers":[{"ID":"2316","answer":"Maybe","correct":"0"},{"ID":"2315","answer":"False","correct":"1"},{"ID":"2314","answer":"True","correct":"0"}]},{"question":"2. Assume the current public debt to GDP ratio is 100 per cent and that the nominal interest rate and the inflation rate remain constant and zero. Under these circumstances it is impossible to reduce a public debt to GDP ratio, using an austerity package if the rise in the primary surplus to GDP ratio is always exactly offset by negative GDP growth rate of the same percentage value.","ID":"346","explanation":"","answers":[{"ID":"2319","answer":"Maybe","correct":"0"},{"ID":"2318","answer":"False","correct":"0"},{"ID":"2317","answer":"True","correct":"1"}]},{"question":"3. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"347","explanation":"","answers":[{"ID":"2321","answer":"False","correct":"1"},{"ID":"2320","answer":"True","correct":"0"}]},{"question":"4. Even though the money multiplier found in macroeconomics textbooks is a flawed description of the way the monetary system operates, having some positive minimum reserve requirements does constrain credit creation activities of the private banks more than if you have no requirements other than the rule that balances have to be positive.","ID":"348","explanation":"","answers":[{"ID":"2329","answer":"Maybe","correct":"0"},{"ID":"2328","answer":"False","correct":"1"},{"ID":"2327","answer":"True","correct":"0"}]},{"question":"5. It is clear that EMU nations cannot use the exchange rate mechanism to adjust for trading imbalances arising from a lack of competitiveness within the Eurozone. With fiscal and monetary policy tied by the EMU arrangements, the only adjustment mechanism left is to reduce wages and prices to restore competitiveness. While harsh this will ultimately improve the competitive position of Greece, Portugal, Ireland and other nations currently in external deficit.","ID":"349","explanation":"","answers":[{"ID":"2326","answer":"False","correct":"1"},{"ID":"2325","answer":"True","correct":"0"}]}]}, {"ID":"70","name":"Quiz 2010 29","added_on":"2010-07-23 11:30:55","questions":[{"question":"1. If the external sector is in deficit overall and GDP growth rate is faster than the real interest rate, then:","ID":"350","explanation":"","answers":[{"ID":"2335","answer":"Neither the private domestic sector or the government sector overall can pay down their debt liabilities.","correct":"0"},{"ID":"2334","answer":"Either the private domestic sector or the government sector overall can pay down their debt liabilities.","correct":"1"},{"ID":"2333","answer":"Both the private domestic sector and the government sector overall can pay down their respective debt liabilities.","correct":"0"}]},{"question":"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. ","ID":"351","explanation":"","answers":[{"ID":"2336","answer":"True","correct":"0"},{"ID":"2337","answer":"False","correct":"1"},{"ID":"2338","answer":"Maybe","correct":"0"}]},{"question":"3. If the US budget deficit keeps rising to meet the need for more fiscal stimulus, the US government would have to bear the political costs of a rising public debt ratio.n","ID":"352","explanation":"","answers":[{"ID":"2339","answer":"True","correct":"0"},{"ID":"2340","answer":"False","correct":"1"}]},{"question":"4. Fiscal rules such as are embodied in the Stability and Growth Pact of the EMU will continually create conditions of slower growth because they deprive the government of fiscal flexibility to support aggregate demand when necessary.","ID":"353","explanation":"","answers":[{"ID":"2341","answer":"True","correct":"0"},{"ID":"2342","answer":"False","correct":"1"}]},{"question":"5. The fact that large scale quantitative easing conducted by central banks in Japan in 2001 and now, more recently, in the UK and the USA 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.","ID":"354","explanation":"","answers":[{"ID":"2343","answer":"True","correct":"0"},{"ID":"2344","answer":"False","correct":"1"}]}]}, {"ID":"71","name":"Quiz 2010 30","added_on":"2010-07-30 15:52:31","questions":[{"question":"1. The policy direction of some EMU nations to resolve their so-called fiscal crisis is to reduce wages and prices in order to restore competitiveness. While harsh this will ultimately improve the competitive position of Greece, Portugal, Ireland and other nations currently in external deficit by increasing aggregate demand via net exports. ","ID":"355","explanation":"","answers":[{"ID":"2345","answer":"True","correct":"0"},{"ID":"2346","answer":"False","correct":"1"}]},{"question":"2. At present, bank lending is capital-constrained rather than reserve constrained. If the central bank forced banks to maintain a reserve ratio of 100 per cent then lending would also be reserve constrained.","ID":"356","explanation":"","answers":[{"ID":"2347","answer":"True","correct":"0"},{"ID":"2348","answer":"False","correct":"1"}]},{"question":"3. A central bank can reduce bank lending while maintaining its target monetary policy rate by increasing the rate that provides reserves to the commercial banks.","ID":"357","explanation":"","answers":[{"ID":"2349","answer":"True","correct":"0"},{"ID":"2350","answer":"False","correct":"1"}]},{"question":"4. A national government that issues its own currency is not revenue-constrained. However, inflation may render it impossible for the government to use budgetary policy to meet the nominal demands for pensions and health care by an increasing proportion of the population.","ID":"358","explanation":"","answers":[{"ID":"2351","answer":"True","correct":"1"},{"ID":"2352","answer":"False","correct":"0"}]},{"question":"5. The growth of bank reserves and the growth in the stock of money have followed a similar path in the recent crisis which signifies that credit creation has been tightly constrained by the recession.","ID":"359","explanation":"","answers":[{"ID":"2356","answer":"False","correct":"0"},{"ID":"2355","answer":"True","correct":"1"}]}]}, {"ID":"72","name":"Quiz 2010 31","added_on":"2010-08-06 10:38:22","questions":[{"question":"1. Mainstream economists use the notion of \\\"crowding out\\\" to argue that public spending squeezes out private spending and results in a less efficient allocation of resources overall. Modern Monetary Theory (MMT) denies that crowding out can occur.","ID":"360","explanation":"","answers":[{"ID":"2357","answer":"True","correct":"0"},{"ID":"2358","answer":"False","correct":"1"},{"ID":"2359","answer":"Maybe","correct":"0"}]},{"question":"2. It is impossible for all national governments to simultaneously run public surpluses without impairing real economic growth because it is likely that the private domestic sector in some countries will desire to save overall.","ID":"361","explanation":"","answers":[{"ID":"2360","answer":"True","correct":"0"},{"ID":"2361","answer":"False","correct":"1"}]},{"question":"3. A rising government deficit will always allow the private domestic sector to increase its saving in nominal terms.","ID":"362","explanation":"","answers":[{"ID":"2365","answer":"False","correct":"1"},{"ID":"2364","answer":"True","correct":"0"}]},{"question":"4. If government net spending increases (rising budget deficit) then policy is becoming more expansionary and the only risk is that nominal aggregate spending growth might exceed the real capacity of the economy to respond by increasing real output and cause inflation.","ID":"363","explanation":"","answers":[{"ID":"2371","answer":"Maybe","correct":"0"},{"ID":"2370","answer":"False","correct":"1"},{"ID":"2369","answer":"True","correct":"0"}]},{"question":"5. Assume the government increases spending by $100 billion in the each of the next three years from now. Economists estimate the spending multiplier to be 1.5 and the impact is immediate and exhausted in each year. They also estimate the tax multiplier (which captures the impact of rising tax rates on GDP) to be equal to 1 and the current average tax rate is equal to 30 per cent. What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"364","explanation":"","answers":[{"ID":"2372","answer":"$150 billion","correct":"0"},{"ID":"2373","answer":"$135 billion","correct":"0"},{"ID":"2374","answer":"$315 billion","correct":"0"},{"ID":"2375","answer":"$450 billion","correct":"1"}]}]}, {"ID":"73","name":"Quiz 2010 32","added_on":"2010-08-12 18:03:25","questions":[{"question":"1. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.","ID":"365","explanation":"","answers":[{"ID":"2376","answer":"True","correct":"1"},{"ID":"2377","answer":"False","correct":"0"},{"ID":"2378","answer":"Maybe","correct":"0"}]},{"question":"2. For a nation running a current account deficit, income adjustments will ensure government budget is in deficit if the domestic private sector seeks to increase its saving overall as a percentage of GDP.","ID":"366","explanation":"","answers":[{"ID":"2379","answer":"True","correct":"1"},{"ID":"2380","answer":"False","correct":"0"},{"ID":"2381","answer":"Maybe","correct":"0"}]},{"question":"3. Higher levels of taxation permit the government to spend more.","ID":"367","explanation":"","answers":[{"ID":"2382","answer":"True","correct":"1"},{"ID":"2383","answer":"False","correct":"0"},{"ID":"2384","answer":"Maybe","correct":"0"}]},{"question":"4. If the central bank pays a positive interest rate on overnight reserves then it no longer has to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements).n","ID":"368","explanation":"","answers":[{"ID":"2385","answer":"True","correct":"0"},{"ID":"2386","answer":"False","correct":"0"},{"ID":"2387","answer":"Maybe","correct":"1"}]},{"question":"5. The payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend increase the overall level of reserves held by the latter (ignore any reserve requirements).","ID":"369","explanation":"","answers":[{"ID":"2388","answer":"True","correct":"1"},{"ID":"2389","answer":"False","correct":"0"}]}]}, {"ID":"74","name":"Quiz 2010 33","added_on":"2010-08-20 16:59:01","questions":[{"question":"1. There has been a lot of talk in the Australian federal election campaign about structural budget deficits. These estimates are typically based on overly pessimistic estimates potential GDP and thus should be disregarded.","ID":"370","explanation":"","answers":[{"ID":"2413","answer":"Maybe","correct":"0"},{"ID":"2412","answer":"False","correct":"0"},{"ID":"2411","answer":"True","correct":"1"}]},{"question":"2. For nations enjoying strong terms of trade (and external surplus), it is sensible for the government to run budget surpluses and accumulate them in a sovereign fund to create more space for non-inflationary spending in the future.","ID":"371","explanation":"","answers":[{"ID":"2401","answer":"Maybe","correct":"0"},{"ID":"2400","answer":"False","correct":"1"},{"ID":"2399","answer":"True","correct":"0"}]},{"question":"3. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.","ID":"372","explanation":"","answers":[{"ID":"2396","answer":"True","correct":"0"},{"ID":"2397","answer":"False","correct":"0"},{"ID":"2398","answer":"Maybe","correct":"1"}]},{"question":"4. Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP minus the changes in the monetary base arising from official foreign exchange transactions.","ID":"373","explanation":"","answers":[{"ID":"2402","answer":"True","correct":"0"},{"ID":"2403","answer":"False","correct":"1"},{"ID":"2404","answer":"Maybe","correct":"0"}]},{"question":"5. It would be impossible for a central bank to directly purchase treasury debt to facilitate the national government"s budget deficit while still targeting a positive short-term policy rate.","ID":"374","explanation":"","answers":[{"ID":"2405","answer":"True","correct":"0"},{"ID":"2406","answer":"False","correct":"0"},{"ID":"2407","answer":"Maybe","correct":"1"}]},{"question":"6. Australian federal election bonus question: Any political party that wants to run a budget surplus when there is an external sector deficit and the private sector is trying to save overall doesn"t deserve to be elected to office or to retain office.","ID":"375","explanation":"","answers":[{"ID":"2408","answer":"True","correct":"0"},{"ID":"2409","answer":"True","correct":"1"},{"ID":"2410","answer":"True","correct":"0"}]}]}, {"ID":"75","name":"Quiz 2010 34","added_on":"2010-08-27 15:03:35","questions":[{"question":"1. The money multiplier suggests that changes in the monetary base are driven by changes in the money supply","ID":"376","explanation":"For more information please read - Teaching macroeconomics students the facts - or post a comment.","answers":[{"ID":"2455","answer":"Maybe","correct":"0"},{"ID":"2454","answer":"False","correct":"1"},{"ID":"2453","answer":"True","correct":"0"}]},{"question":"2. When economic growth resumes the automatic stabilisers work in a counter-cyclical fashion and ensure that the government budget balance returns to its appropriate level.n","ID":"377","explanation":"For more information please read - Fiscal sustainability and ratio fever - or post a comment.","answers":[{"ID":"2458","answer":"Maybe","correct":"1"},{"ID":"2457","answer":"False","correct":"0"},{"ID":"2456","answer":"True","correct":"0"}]},{"question":"3. One possible problem with running continuous budget deficits is that the spending builds up over time and with inflation eventually becoming the risk that has to be managed.","ID":"378","explanation":"For more information please read - Life in Europe another day, another (futile) bailout - or post a comment.","answers":[{"ID":"2461","answer":"Maybe","correct":"0"},{"ID":"2460","answer":"False","correct":"1"},{"ID":"2459","answer":"True","correct":"0"}]},{"question":"4. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"379","explanation":"For more information please read - Doublethink - or post a comment.","answers":[{"ID":"2469","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"},{"ID":"2468","answer":"A nation can run a current account deficit with a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"2466","answer":"A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"2467","answer":"A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","correct":"1"}]},{"question":"5. The IMF and the European leaders all claim that Eurozone nations need to rely on internal devaluation to restore growth and so the austerity programs are designed to deflate nominal wages and prices. It is claimed that for each individual economy this strategy will render it more competitive as long as real unit labour costs fall faster than their trading partners. However, ignoring whether the logic is correct or not, which of the following propositions must also follow if the logic is to follow:","ID":"380","explanation":"For more information please read - Doublethink - or post a comment.","answers":[{"ID":"2441","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and what happens to employment is irrelevant.","correct":"1"},{"ID":"2440","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and employment must grow.","correct":"0"},{"ID":"2439","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and employment remain constant or grow.","correct":"0"},{"ID":"2442","answer":"None of the above","correct":"0"}]}]}, {"ID":"76","name":"Quiz 2010 35","added_on":"2010-09-03 17:04:02","questions":[{"question":"1. A sovereign national government can run a balanced budget over the business cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will mirror the external balance. That means a country running an external deficit will have an increasingly indebted private domestic sector.","ID":"381","explanation":"","answers":[{"ID":"2470","answer":"True","correct":"1"},{"ID":"2471","answer":"False","correct":"0"},{"ID":"2472","answer":"Maybe","correct":"0"}]},{"question":"2. If nominal wages keep pace with inflation which is accelerating at the same rate as labour productivity is growing then there is no shift in the wage share in GDP.","ID":"382","explanation":"","answers":[{"ID":"2473","answer":"True","correct":"1"},{"ID":"2474","answer":"False","correct":"0"},{"ID":"2475","answer":"Maybe","correct":"0"}]},{"question":"3. A Eurozone nation that runs a persistent current account deficit cannot sustain rising living standards over time given that the ECB chooses to maintain rigid control of the inflation rate.","ID":"383","explanation":"","answers":[{"ID":"2476","answer":"True","correct":"0"},{"ID":"2477","answer":"False","correct":"0"},{"ID":"2478","answer":"Unlikely","correct":"1"}]},{"question":"4. A nation that manages its currency via a currency board (for example, Estonia and Latvia) has to have sufficient foreign reserves to match the outstanding central bank liabilities (reserves and cash outstanding). Under this arrangement it can always guarantee 100 per cent convertibility but has to endure deflationary tendencies unless it runs external surpluses.","ID":"384","explanation":"","answers":[{"ID":"2487","answer":"Maybe","correct":"0"},{"ID":"2486","answer":"False","correct":"0"},{"ID":"2485","answer":"True","correct":"1"}]},{"question":"5. Modern Monetary Theory (MMT) demonstrates that mass unemployment can arise from workers demanding too high a nominal wage in relation to the inflation rate.","ID":"385","explanation":"","answers":[{"ID":"2482","answer":"True","correct":"1"},{"ID":"2483","answer":"False","correct":"0"},{"ID":"2484","answer":"Maybe","correct":"0"}]}]}, {"ID":"77","name":"Quiz 2010 36","added_on":"2010-09-10 17:32:16","questions":[{"question":"1 The IMF and the OECD equate the Non-Accelerating Inflation Rate of Unemployment (NAIRU) with their concept of full employment and they use the NAIRU to calibrate their structural deficit estimates. Accordingly, the structural deficits will typically be:","ID":"386","explanation":"","answers":[{"ID":"2493","answer":"difficult to assess because their forecasts are subject to forecasting inaccuracy.","correct":"0"},{"ID":"2492","answer":"biased upwards thus indicating, at any point in the business cycle, that the government fiscal stance is more expansionary than it actually is.n","correct":"1"},{"ID":"2491","answer":"biased downwards thus indicating, at any point in the business cycle, that the government fiscal stance is less expansionary than it actually is.n","correct":"0"}]},{"question":"2. Rising public debt levels at constant interest rates increase the volume of interest servicing payments that have to be made. For a sovereign nation entrenched in recession, these payments will:","ID":"387","explanation":"","answers":[{"ID":"2494","answer":"reduce the room $-for-$ for other non-inflationary discretionary deficit spending because they will \\\"fill up the spending gap\\\" more quickly.","correct":"0"},{"ID":"2495","answer":"reduce the capacity of the private sector to save because they will require cuts backs in the deficit to support the repayments.","correct":"0"},{"ID":"2496","answer":"not reduce the room $-for-$ for other non-inflationary discretionary deficit spending because increasing imports will keep opening the spending gap that has to be \\\"filled\\\".","correct":"1"}]},{"question":"3. Under a fiat monetary system, the absence of currency convertibility means:","ID":"388","explanation":"","answers":[{"ID":"2497","answer":"there is no reason for people to hold currency as a hedge against gold price falls.","correct":"0"},{"ID":"2498","answer":"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.","correct":"1"},{"ID":"2499","answer":"that the currency is only convertible into government bonds rather than gold.","correct":"0"}]},{"question":"4. When a sovereign government issues debt it logically:","ID":"389","explanation":"","answers":[{"ID":"2500","answer":"increases the assets that are held by the non-government sector $-for-$.","correct":"0"},{"ID":"2501","answer":"has no impact on the overall holdings of assets held by the non-government sector $-for-$.","correct":"1"},{"ID":"2502","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"}]},{"question":"5. Only one of the following statements can be true when you observe rising government bond yields for new issues:","ID":"390","explanation":"","answers":[{"ID":"2503","answer":"Government spending is becoming more expensive.n","correct":"0"},{"ID":"2504","answer":"Bond prices are falling in response to demand.","correct":"1"},{"ID":"2505","answer":"Government spending is increasing the cost of borrowing for private investors.","correct":"0"}]}]}, {"ID":"78","name":"Quiz 2010 37","added_on":"2010-09-17 13:36:58","questions":[{"question":"1. The stronger is the the demand for public bonds at a government auction","ID":"391","explanation":"","answers":[{"ID":"2506","answer":"the higher the yields will be at that asset maturity, which suggests that higher budget deficits will eventually drive short-term interest rates down.","correct":"0"},{"ID":"2507","answer":"the lower the yields will be at that asset maturity, which suggests that higher budget deficits will eventually drive short-term interest rates down.","correct":"0"},{"ID":"2508","answer":"the lower the yields will be at that asset maturity but this tells us nothing about the effect of budget deficits on short-term interest rates","correct":"1"}]},{"question":"2. A sovereign government voluntarily issues debt to the private sector to match its spending. The more public debt it issues","ID":"392","explanation":"","answers":[{"ID":"2509","answer":"the less is the volume of investment funds in the non-government sector that can be used for other investments.","correct":"0"},{"ID":"2510","answer":"the greater is non-government wealth held in the form of public debt.","correct":"1"},{"ID":"2511","answer":"the more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"}]},{"question":"3. When the government pays back funds that is has borrowed from the non-government sector the payments may","ID":"393","explanation":"","answers":[{"ID":"2512","answer":"be inflationary if by the time the bonds mature the economy is growing strongly so there will be too much money floating about.","correct":"0"},{"ID":"2513","answer":"be inflationary if the government payments to bond holders at maturity add more to nominal aggregate demand than the real economy can support given other policy settings.","correct":"1"},{"ID":"2514","answer":"not be inflationary because the sovereign government just has to credit the bank accounts of those who hold the bonds to repay them.","correct":"0"}]},{"question":"4. When an external deficit and public deficit coincide, there must be a private sector deficit. This suggests that governments can only run budget deficits safely to support a private sector surplus, when net exports are strong.","ID":"394","explanation":"","answers":[{"ID":"2515","answer":"True","correct":"0"},{"ID":"2516","answer":"False","correct":"1"},{"ID":"2517","answer":"Maybe","correct":"0"}]},{"question":"5. When the private domestic sector decides to lift its saving ratio we cannot conclude that the national government has to increase its net spending (deficit) to avoid employment losses.","ID":"395","explanation":"","answers":[{"ID":"2518","answer":"True","correct":"1"},{"ID":"2519","answer":"False","correct":"0"},{"ID":"2520","answer":"Maybe","correct":"0"}]}]}, {"ID":"79","name":"Quiz 2010 38","added_on":"2010-09-24 11:20:40","questions":[{"question":"1. In a fiat monetary system (for example, US or Australia) with an on-going external deficit, if you desire the domestic private sector to reduce its overall debt levels without employment losses, then you have to support the national government continually increasing the budget deficit in line with the private de-leveraging process.","ID":"396","explanation":"","answers":[{"ID":"2521","answer":"True","correct":"0"},{"ID":"2522","answer":"False","correct":"0"},{"ID":"2523","answer":"Maybe","correct":"1"}]},{"question":"2. The only time that a budget surplus represents increased national savings is when the government creates a sovereign fund.n","ID":"397","explanation":"","answers":[{"ID":"2524","answer":"True","correct":"0"},{"ID":"2525","answer":"False","correct":"1"},{"ID":"2526","answer":"Maybe","correct":"0"}]},{"question":"3. The massive build-up of Chinese holdings of US government debt has allowed US citizens to enjoy a higher material standard of living overall at the expense of the residents of China.","ID":"398","explanation":"","answers":[{"ID":"2541","answer":"Maybe","correct":"0"},{"ID":"2540","answer":"False","correct":"0"},{"ID":"2539","answer":"True","correct":"1"}]},{"question":"4. Short-term interest rates are set by the central bank while the fiscal strategy manifests in tax and spending decisions by the government. Whereas the private sector cannot directly influence the interest rate target being set the budget outcome at any point is not something the government can control.","ID":"399","explanation":"","answers":[{"ID":"2547","answer":"Maybe","correct":"0"},{"ID":"2546","answer":"False","correct":"0"},{"ID":"2545","answer":"True","correct":"1"}]},{"question":"5. If employment growth matches the pace of growth in the civilian population (people above 15 years of age) then the economy will experience a constant unemployment rate as long as participation rates do not change.","ID":"400","explanation":"","answers":[{"ID":"2544","answer":"Maybe","correct":"0"},{"ID":"2543","answer":"False","correct":"0"},{"ID":"2542","answer":"True","correct":"1"}]}]}, {"ID":"80","name":"Quiz 2010 39","added_on":"2010-10-02 10:42:35","questions":[{"question":"1. If there is more \\\"money\\\" in the economy its value declines.","ID":"401","explanation":"","answers":[{"ID":"2548","answer":"True","correct":"0"},{"ID":"2549","answer":"False","correct":"0"},{"ID":"2550","answer":"Maybe","correct":"1"}]},{"question":"2. If national government public works expenditure funds the construction of a road and then the government tears the road up again and rebuilds it, there is no net gain in employment and national income the second time round.","ID":"402","explanation":"","answers":[{"ID":"2568","answer":"Maybe","correct":"0"},{"ID":"2567","answer":"False","correct":"1"},{"ID":"2566","answer":"True","correct":"0"}]},{"question":"3. If there was a fiscal rule imposed such that the national government had to balance its budget at all times then this would also eliminate the sensitivity of the budget outcome to the automatic stabilisers.","ID":"403","explanation":"","answers":[{"ID":"2554","answer":"True","correct":"0"},{"ID":"2555","answer":"False","correct":"1"},{"ID":"2556","answer":"Maybe","correct":"0"}]},{"question":"4. The private domestic sector will always run a deficit (spend more than they earn) which is exactly equal to the external deficit, if the government balances its budget on average over the business cycle.","ID":"404","explanation":"","answers":[{"ID":"2562","answer":"Maybe","correct":"0"},{"ID":"2561","answer":"False","correct":"0"},{"ID":"2560","answer":"True","correct":"1"}]},{"question":"5. This is the premium question for this week: Consumption adds to aggregate demand and imports drain aggregate demand. The marginal propensity to consume (MPC) is conceptually the extra consumption that is induced for every extra dollar of national income. The marginal propensity to import (MPM) is similarly the extra spending on imports that is induced for every extra dollar of national income. If the MPC and MPM both rise by 0.1 then the impact on aggregate demand for every new dollar of national income generated will be neutral.","ID":"405","explanation":"","answers":[{"ID":"2571","answer":"Maybe","correct":"0"},{"ID":"2570","answer":"False","correct":"1"},{"ID":"2569","answer":"True","correct":"0"}]}]}, {"ID":"81","name":"Quiz 2010 40","added_on":"2010-10-09 01:57:28","questions":[{"question":"1. If we assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting then if government spending increases by $X dollars and private investment and exports are unchanged nominal income will continue growing until the sum of taxation revenue, import spending and household saving rises by more than $X dollars because of the multiplier.","ID":"406","explanation":"","answers":[{"ID":"2572","answer":"True","correct":"0"},{"ID":"2573","answer":"False","correct":"1"},{"ID":"2574","answer":"Maybe","correct":"0"}]},{"question":"2. When a government such as the US government voluntarily constrains itself to borrow to cover its net spending position, it substitutes its spending for the borrowed funds and logically reduces the private capacity to borrow and spend.","ID":"407","explanation":"","answers":[{"ID":"2575","answer":"True","correct":"0"},{"ID":"2576","answer":"False","correct":"1"},{"ID":"2577","answer":"Maybe","correct":"0"}]},{"question":"3. When the national government"s budget balance moves into deficit:","ID":"408","explanation":"","answers":[{"ID":"2578","answer":"it is a sign that the government is trying to stimulate the economy.","correct":"0"},{"ID":"2579","answer":"it is a sign that the government is worried that unemployment is rising.","correct":"0"},{"ID":"2580","answer":"you cannot conclude anything about the government"s policy intentions.","correct":"1"}]},{"question":"4. The crucial difference between a monetary system based on the convertible currency backed by gold and a fiat currency monetary is:","ID":"409","explanation":"","answers":[{"ID":"2581","answer":"that under the former system, excessive national government spending led to inflation.","correct":"0"},{"ID":"2582","answer":"that under the former system, the national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"2583","answer":"that under the former system, the national government could not use net spending to achieve full employment.","correct":"0"}]},{"question":"5. This is the premium question for this week: In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 1 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The government"s budget balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 3 per cent. In Year 2, the government stimulates the economy and pushes the primary budget deficit out to 2 per cent of GDP and in doing so stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio will rise but by an amount less than the rise in the budget deficit because of the real growth in the economy.","ID":"410","explanation":"","answers":[{"ID":"2584","answer":"True","correct":"0"},{"ID":"2585","answer":"False","correct":"1"},{"ID":"2586","answer":"Maybe","correct":"0"}]}]}, {"ID":"82","name":"Quiz 2010 41","added_on":"2010-10-15 19:43:20","questions":[{"question":"1. If the growth in wages (the money you get paid) keeps pace with inflation which is accelerating at the same rate as labour productivity is growing then the profit share in GDP remains constant.","ID":"411","explanation":"","answers":[{"ID":"2587","answer":"True","correct":"1"},{"ID":"2588","answer":"False","correct":"0"},{"ID":"2589","answer":"Cannot tell from this information","correct":"0"}]},{"question":"2. Central bankers are talking about the possible need for more quantitative easing to ease the aggregate demand losses associated with the implementation of fiscal austerity programs. If calibrated correctly, QE can replace the net financial assets destroyed by the withdrawal of the fiscal injection.","ID":"412","explanation":"","answers":[{"ID":"2590","answer":"True","correct":"0"},{"ID":"2591","answer":"False","correct":"1"},{"ID":"2592","answer":"Maybe","correct":"0"}]},{"question":"3. The expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance because then excess reserves are drained and the purchasing power is taken out of the monetary system.","ID":"413","explanation":"","answers":[{"ID":"2593","answer":"True","correct":"0"},{"ID":"2594","answer":"False","correct":"1"},{"ID":"2595","answer":"Maybe","correct":"0"}]},{"question":"4. The change in the net worth of the non-government sector when the government increases its net spending is invariant to government issuing debt which exactly matches ($-for-$) the increase in net public spending.","ID":"414","explanation":"","answers":[{"ID":"2596","answer":"True","correct":"1"},{"ID":"2597","answer":"False","correct":"0"},{"ID":"2598","answer":"Maybe","correct":"0"}]},{"question":"5. Premium Question: The government is attempting to stimulate the economy via an expansion in the budget deficit. The private market orientated advisors tell them to cut taxes and \\\"privatise\\\" the expansion whereas the more civic-minded advisors argue that there is a need for improved public infrastructure which requires increases in government spending. So imagine that the government is choosing between a tax cut that will reduce tax revenue at the current level of national income by $x and a spending increase of $x. Which policy option will have the greater initial impact on aggregate demand?","ID":"415","explanation":"","answers":[{"ID":"2599","answer":"Tax cut","correct":"0"},{"ID":"2600","answer":"Spending increase","correct":"1"},{"ID":"2601","answer":"Both will be equivalent","correct":"0"},{"ID":"2602","answer":"There is not enough information to answer this question","correct":"0"}]}]}, {"ID":"83","name":"Quiz 2010 42","added_on":"2010-10-22 17:19:59","questions":[{"question":"1. A budget deficit equivalent to 3 per cent of GDP signals that the government is adopting a less expansionary policy than if the budget deficit outcome was equivalent to 5 per cent of GDP.","ID":"416","explanation":"","answers":[{"ID":"2603","answer":"True","correct":"0"},{"ID":"2604","answer":"False","correct":"0"},{"ID":"2605","answer":"Maybe","correct":"1"}]},{"question":"2. When the government borrows from the private sector to match an increase in net public spending, the resulting increase in aggregate demand is less than would be the case if there was no bond sale.","ID":"417","explanation":"","answers":[{"ID":"2606","answer":"True","correct":"0"},{"ID":"2607","answer":"False","correct":"1"},{"ID":"2608","answer":"Maybe","correct":"0"}]},{"question":"3. If the external balance remains in surplus, then the national government will not impede economic growth by running a budget surplus.","ID":"418","explanation":"","answers":[{"ID":"2609","answer":"True","correct":"0"},{"ID":"2610","answer":"False","correct":"1"}]},{"question":"4. Fiscal rules such as are embodied in the Stability and Growth Pact of the EMU will continually create conditions of slower growth because they deprive the government of fiscal flexibility to support aggregate demand when necessary. ","ID":"419","explanation":"","answers":[{"ID":"2615","answer":"False","correct":"1"},{"ID":"2614","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Consider the following table which describes four different economies in terms of the behavioural parameters relating to the leakages to aggregate demand.nnAssume that in all four economies, there is idle capacity, the central bank holds all interest rates constant, inflation is constant and there is no changes in international competitiveness.nn
n\\\"\\\"n
nnWhich economy would deliver the largest national income bonus for a given discretionary expansion in government spending.","ID":"420","explanation":"","answers":[{"ID":"2631","answer":"Economy D","correct":"0"},{"ID":"2630","answer":"Economy C","correct":"0"},{"ID":"2629","answer":"Economy B","correct":"0"},{"ID":"2628","answer":"Economy A","correct":"1"}]}]}, {"ID":"84","name":"Quiz 2010 43","added_on":"2010-10-29 17:24:05","questions":[{"question":"1. Quite apart from whether they understand that they do not face any financial constraints, governments are now trying to reduce their budget deficits because they correctly understand that additional fiscal stimulus would increase the public debt ratios which would worsen their political positions.","ID":"421","explanation":"","answers":[{"ID":"2632","answer":"True","correct":"0"},{"ID":"2633","answer":"False","correct":"1"},{"ID":"2634","answer":"Maybe","correct":"0"}]},{"question":"2. The recent practice of large-scale quantitative easing (so-called printing money) in many nations and the fact that inflation is benign, strongly refutes the mainstream theory of inflation embodied in the Quantity Theory of Money, which claims that growth in the stock of money will be inflationary.","ID":"422","explanation":"","answers":[{"ID":"2635","answer":"True","correct":"0"},{"ID":"2636","answer":"False","correct":"1"},{"ID":"2637","answer":" Maybe","correct":"0"}]},{"question":"3. Bank lending is capital-constrained rather than reserve constrained. If the central bank forced banks to maintain a reserve ratio of 100 per cent then lending would also be reserve constrained.","ID":"423","explanation":"","answers":[{"ID":"2638","answer":"True","correct":"0"},{"ID":"2639","answer":"False","correct":"1"},{"ID":"2640","answer":"Maybe","correct":"0"}]},{"question":"4. In an endogenous money system, a central bank cannot reduce bank lending while maintaining its target monetary policy rate by increasing the rate that provides reserves to the commercial banks.","ID":"424","explanation":"","answers":[{"ID":"2645","answer":"False","correct":"0"},{"ID":"2644","answer":"True","correct":"1"}]},{"question":"5. Premium Question: In the context of population ageing, the fact that a sovereign government is never financially constrained may become irrelevant in terms of their capacity to provide first-class health care and pensions given rising dependency ratios.","ID":"425","explanation":"","answers":[{"ID":"2646","answer":"True","correct":"1"},{"ID":"2647","answer":"False","correct":"0"}]}]}, {"ID":"85","name":"Quiz 2010 44","added_on":"2010-11-05 18:51:19","questions":[{"question":"1. The price at which the central bank provides reserves to the commercial banks is restricted by its target monetary policy rate.n","ID":"426","explanation":"","answers":[{"ID":"2648","answer":"True","correct":"1"},{"ID":"2649","answer":"False","correct":"0"}]},{"question":"2. The Australian dollar is currently appreciating strongly against many key currencies and this has put pressure on our international competitiveness. Given the terms of trade are so strong, a cut in wages and the rate of inflation would be the way to restore competitiveness. This would help maintain strong export growth.","ID":"427","explanation":"","answers":[{"ID":"2650","answer":"True","correct":"0"},{"ID":"2651","answer":"False","correct":"0"},{"ID":"2652","answer":"Maybe","correct":"1"}]},{"question":"3. If the budget deficit rises then government policy is becoming more expansionary and this carries the risk that nominal aggregate spending growth might exceed the real capacity of the economy to respond by increasing real output. ","ID":"428","explanation":"","answers":[{"ID":"2653","answer":"True","correct":"0"},{"ID":"2654","answer":"False","correct":"1"}]},{"question":"4. If all national governments simultaneously run public surpluses then it is not possible for all their private domestic sectors to save overall.","ID":"429","explanation":"","answers":[{"ID":"2655","answer":"True","correct":"1"},{"ID":"2656","answer":"False","correct":"0"}]},{"question":"5. Premium question: From the US National Accounts, you find that in 2006, the share of Personal consumption expenditure in real GDP was 69.9 per cent and by 2008 it had fallen to 69.8 per cent. Similarly, the share of Gross private domestic investment on real GDP was 17.2 per cent in 2006 and by 2008 had fallen to 14.9 per cent (and further to 11.8 per cent in 2009). The net export deficit over the same period (2006 to 2008) fell from -5.7 per cent of real GDP to -4.9 per cent in 2008. Finally, the share of Government consumption expenditures and gross investment in real GDP rose from 18.8 per cent in 2006 to 18.9 per cent in 2008 (and 19.7 per cent in 2009). These relative changes tell you that real GDP was lower in 2008 compared to 2006 because the increase in Government spending and the falling negative contribution of net exports were not sufficient to offset the declining contribution from consumption and investment.","ID":"430","explanation":"","answers":[{"ID":"2657","answer":"True","correct":"0"},{"ID":"2658","answer":"False","correct":"1"},{"ID":"2659","answer":"Maybe","correct":"0"}]}]}, {"ID":"86","name":"Quiz 2010 45","added_on":"2010-11-12 16:53:04","questions":[{"question":"1. By increasing tax rates a sovereign government increases its capacity to spend more without increasing inflation.","ID":"431","explanation":"","answers":[{"ID":"2660","answer":"True","correct":"1"},{"ID":"2661","answer":"False","correct":"0"},{"ID":"2662","answer":"Maybe","correct":"0"}]},{"question":"2. Ignoring any reserve requirements, if the central bank pays a positive interest rate on overnight reserves then it no longer has to conduct open market operations to ensure its policy rate is sustained.","ID":"432","explanation":"","answers":[{"ID":"2663","answer":"True","correct":"0"},{"ID":"2664","answer":"False","correct":"0"},{"ID":"2665","answer":"Maybe","correct":"1"}]},{"question":"3. Ignoring any reserve requirements, the payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend increase the overall level of reserves held by the latter.","ID":"433","explanation":"","answers":[{"ID":"2666","answer":"True","correct":"1"},{"ID":"2667","answer":"False","correct":"0"},{"ID":"2668","answer":"Maybe","correct":"0"}]},{"question":"4. Other things equal, larger fiscal deficits as a percentage of GDP squeeze the availability of real resources that the private sector can use for other productive uses.","ID":"434","explanation":"","answers":[{"ID":"2669","answer":"True","correct":"1"},{"ID":"2670","answer":"False","correct":"0"},{"ID":"2671","answer":"Maybe","correct":"0"}]},{"question":"5. Premium Question: For a nation running a small current account deficit, the government budget will always be in deficit if the domestic private sector overall successfully saves.","ID":"435","explanation":"","answers":[{"ID":"2672","answer":"True","correct":"1"},{"ID":"2673","answer":"False","correct":"0"},{"ID":"2674","answer":"Maybe","correct":"0"}]}]}, {"ID":"87","name":"Quiz 2010 46","added_on":"2010-11-19 09:32:27","questions":[{"question":"1. A nation that has a strong terms of trade (and external surplus) is able to run a budget surplus without necessarily forcing the private domestic sector into deficit. It is sensible under these conditions to invest the surpluses in a sovereign fund which creates more space for non-inflationary public spending in the future.","ID":"436","explanation":"","answers":[{"ID":"2675","answer":"True","correct":"0"},{"ID":"2676","answer":"False","correct":"1"},{"ID":"2677","answer":"Maybe","correct":"0"}]},{"question":"2. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.n","ID":"437","explanation":"","answers":[{"ID":"2678","answer":"True","correct":"0"},{"ID":"2679","answer":"False","correct":"0"},{"ID":"2680","answer":"Maybe","correct":"1"}]},{"question":"3. Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP minus the changes in the monetary base arising from official foreign exchange transactions conducted by the central bank.","ID":"438","explanation":"","answers":[{"ID":"2681","answer":"True","correct":"0"},{"ID":"2682","answer":"False","correct":"1"},{"ID":"2683","answer":"Maybe","correct":"0"}]},{"question":"4. It would be impossible for a central bank to directly purchase treasury debt to facilitate the national governments budget deficit (that is, \\\"monetise the deficit\\\") while still targeting a positive short-term policy rate.","ID":"439","explanation":"","answers":[{"ID":"2693","answer":"Maybe","correct":"0"},{"ID":"2692","answer":"False","correct":"1"},{"ID":"2691","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Assume the government increases spending by $100 billion in the each of the next three years from now. Economists estimate the spending multiplier (which is the multiple by which income increases for a given injection of spending) to be 1.5 and the impact is immediate and exhausted in each year. They also estimate that the import propensity is 0.2 (meaning that imports rise by 20 cents for every dollar generated in the economy). They also estimate the tax multiplier (impact of tax changes on income) to be equal to 1 and the current tax rate is equal to 30 per cent. So for every extra dollar produced, tax revenue rises by 30 cents. Which of the following statements is correct?","ID":"440","explanation":"","answers":[{"ID":"2687","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $450 billion and the private sector saves 24 cents out of every extra dollar generated.","correct":"1"},{"ID":"2688","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $450 billion and the private sector saves 28 cents out of every extra dollar generated.","correct":"0"},{"ID":"2689","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $315 billion and the private sector saves 24 cents out of every extra dollar generated.","correct":"0"},{"ID":"2690","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $315 billion and the private sector saves 28 cents out of every extra dollar generated.","correct":"0"}]}]}, {"ID":"88","name":"Quiz 2010 47","added_on":"2010-11-26 09:54:28","questions":[{"question":"1. According to the theory of the money multiplier that changes in the monetary base are driven by changes in the money supply.","ID":"441","explanation":"","answers":[{"ID":"2694","answer":"True","correct":"0"},{"ID":"2695","answer":"False","correct":"1"},{"ID":"2696","answer":"Only when there is not a liquidity trap","correct":"0"}]},{"question":"2. If the nation is running a current account deficit which is accompanied by a government sector surplus of equal proportion to GDP, then the private domestic sector is spending more than they are earning and increasing its indebtedness.","ID":"442","explanation":"","answers":[{"ID":"2697","answer":"True","correct":"1"},{"ID":"2698","answer":"False","correct":"0"},{"ID":"2699","answer":"Maybe","correct":"0"}]},{"question":"3. With the Eurozone nations unable to gain competitive relief via nominal exchange rate adjustments the hope is that by deflating wages and prices real unit labour costs will fall. Assuming other nations do nothing and wages and prices fall at the same rate, then a real exchange rate depreciation (relative to other nations) requires labour productivity and employment growth to rise.","ID":"443","explanation":"","answers":[{"ID":"2700","answer":"True","correct":"0"},{"ID":"2701","answer":"False","correct":"1"},{"ID":"2702","answer":"Maybe","correct":"0"}]},{"question":"4. In a stock-flow consistent macroeconomics, we know that flows during a period add to relevant stocks at the end of the period. Accordingly, government and private investment spending are two examples of spending flows that add to the stock of aggregate demand which in turn impacts on Gross Domestic Product (National Income) because spending equals income.","ID":"444","explanation":"","answers":[{"ID":"2703","answer":"True","correct":"0"},{"ID":"2704","answer":"False","correct":"1"},{"ID":"2705","answer":"Maybe, if the spending multiplier is positive","correct":"0"}]},{"question":"5. Premium question: Many countries are facing higher public debt to GDP ratios as a consequence of the crisis and some are approaching 100 per cent. Assume the current public debt to GDP ratio is 100 per cent and that central banks keep nominal interest rates and inflation constant and zero. While fiscal austerity is likely to prolong the recession, it is still possible to reduce the public debt to GDP ratio (under these circumstances), if the primary budget surplus to GDP ratio is higher than the negative GDP growth rate that results.","ID":"445","explanation":"","answers":[{"ID":"2706","answer":"True","correct":"1"},{"ID":"2707","answer":"False","correct":"0"},{"ID":"2708","answer":"Maybe","correct":"0"}]}]}, {"ID":"89","name":"Quiz 2010 48","added_on":"2010-12-03 17:52:51","questions":[{"question":"1. A sovereign national government can run a balanced budget over the business cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will only be in surplus if the external balance is in surplus.","ID":"446","explanation":"","answers":[{"ID":"2717","answer":"Maybe, if private sector indebtedness is low.","correct":"0"},{"ID":"2716","answer":"False","correct":"0"},{"ID":"2715","answer":"True","correct":"1"}]},{"question":"2. Modern Monetary Theory (MMT) demonstrates that mass unemployment can arise from workers demanding nominal wage growth in excess of inflation. That is, excessive real wages can cause unemployment.","ID":"447","explanation":"","answers":[{"ID":"2723","answer":"Maybe","correct":"0"},{"ID":"2722","answer":"False","correct":"0"},{"ID":"2721","answer":"True","correct":"1"}]},{"question":"3. A Eurozone nation that runs a persistent current account deficit cannot sustain rising living standards over time given that the ECB chooses to maintain rigid control of the inflation rate.","ID":"448","explanation":"","answers":[{"ID":"2724","answer":"True","correct":"0"},{"ID":"2725","answer":"False","correct":"0"},{"ID":"2726","answer":"Unlikely","correct":"1"}]},{"question":"4. A rising wage share in GDP requires nominal wages to grow faster than inflation.","ID":"449","explanation":"","answers":[{"ID":"2732","answer":"Maybe","correct":"0"},{"ID":"2731","answer":"False","correct":"1"},{"ID":"2730","answer":"True","correct":"0"}]},{"question":"5. Premium question: Imagine that macroeconomic policy is geared towards keeping real GDP growth on trend. Assume this rate of growth is 3 per cent per annum. If labour productivity is growing at 2 per cent per annum and the labour force is growing at 1.5 per cent per annum and the average working week is constant in hours, then the policy-driven trend will lead to a falling unemployment rate.","ID":"450","explanation":"","answers":[{"ID":"2738","answer":"Maybe, depending on what is happening to aggregate demand.","correct":"0"},{"ID":"2736","answer":"True","correct":"0"},{"ID":"2737","answer":"False","correct":"1"}]}]}, {"ID":"90","name":"Quiz 2010 49","added_on":"2010-12-10 17:15:45","questions":[{"question":"1. The IMF and the OECD equate the Non-Accelerating Inflation Rate of Unemployment (NAIRU) with their concept of full employment and they use the NAIRU to calibrate their structural deficit estimates. Accordingly, the structural deficits will typically be:","ID":"451","explanation":"","answers":[{"ID":"2739","answer":"biased downwards thus indicating, at any point in the business cycle, that the government fiscal stance is less expansionary than it actually is.nn","correct":"0"},{"ID":"2740","answer":"biased upwards thus indicating, at any point in the business cycle, that the government fiscal stance is more expansionary than it actually is.","correct":"1"},{"ID":"2741","answer":"difficult to assess because their forecasts are subject to forecasting inaccuracy.","correct":"0"}]},{"question":"2. Rising public debt levels at constant interest rates increase the volume of interest servicing payments that have to be made. For a sovereign nation entrenched in recession, these payments will:","ID":"452","explanation":"","answers":[{"ID":"2756","answer":"not reduce the room $-for-$ for other non-inflationary discretionary deficit spending because increasing imports will keep opening the spending gap that has to be \\\"filled\\\".","correct":"1"},{"ID":"2755","answer":"reduce the capacity of the private sector to save because they will require cuts backs in the deficit to support the repayments.","correct":"0"},{"ID":"2754","answer":"reduce the room $-for-$ for other non-inflationary discretionary deficit spending because they will \\\"fill up the spending gap\\\" more quickly.","correct":"0"}]},{"question":"3. When a sovereign government issues debt it logically:nnnn","ID":"453","explanation":"","answers":[{"ID":"2745","answer":"increases the financial assets that are held by the non-government sector $-for-$.","correct":"0"},{"ID":"2746","answer":"has no impact on the overall holdings of financial assets held by the non-government sector $-for-$.","correct":"1"},{"ID":"2747","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"}]},{"question":"4. Only one of the following statements is definitely true when you observe rising government bond yields for new issues:","ID":"454","explanation":"","answers":[{"ID":"2748","answer":"Government spending is becoming more expensive.","correct":"0"},{"ID":"2749","answer":"Bond prices are falling in response to falling demand.","correct":"1"},{"ID":"2750","answer":"Government spending is increasing the cost of borrowing for private investors.","correct":"0"}]},{"question":"5. Premium question: Open market operations as a means of ensuring that levels of bank reserves are consistent with the policy target becomes redundant if the central bank pays a positive interest rate on overnight reserves held by the commercial banks (ignore any reserve requirements in place when answering).","ID":"455","explanation":"","answers":[{"ID":"2751","answer":"True","correct":"0"},{"ID":"2752","answer":"False","correct":"0"},{"ID":"2753","answer":"Maybe","correct":"1"}]}]}, {"ID":"91","name":"Quiz 2010 50","added_on":"2010-12-18 07:47:22","questions":[{"question":"1. The use of a budget surplus to create a sovereign fund provides the government with more spending options in the future.","ID":"456","explanation":"","answers":[{"ID":"2757","answer":"True","correct":"0"},{"ID":"2758","answer":"False","correct":"1"},{"ID":"2759","answer":"Maybe","correct":"0"}]},{"question":"2. Fiscal rules ultimately fail to deliver the announced budget targets because the government does not control the budget outcome.","ID":"457","explanation":"","answers":[{"ID":"2760","answer":"True","correct":"1"},{"ID":"2761","answer":"False","correct":"0"},{"ID":"2762","answer":"Maybe","correct":"0"}]},{"question":"3. If employment growth matches the pace of growth in the working age population (people above 15 years of age) then the economy will experience a constant unemployment rate as long as participation rates do not change.","ID":"458","explanation":"","answers":[{"ID":"2763","answer":"True","correct":"1"},{"ID":"2764","answer":"False","correct":"0"},{"ID":"2765","answer":"Maybe","correct":"0"}]},{"question":"4. In a fiat monetary system (for example, US or Australia) with an on-going external deficit, the domestic private sector can reduce its overall debt levels (by saving) without employment losses, if the national government supports the private de-leveraging process by running a budget deficit.","ID":"459","explanation":"","answers":[{"ID":"2766","answer":"True","correct":"0"},{"ID":"2767","answer":"False","correct":"0"},{"ID":"2768","answer":"Maybe","correct":"1"}]},{"question":"5. Premium Question: The monetary base always adjusts to changes in the money supply.","ID":"460","explanation":"","answers":[{"ID":"2769","answer":"True","correct":"1"},{"ID":"2770","answer":"False","correct":"0"},{"ID":"2771","answer":"Maybe if the central bank imposes reserve requirements","correct":"0"}]}]}, {"ID":"92","name":"Quiz 2010 51 - Special North Pole Edition","added_on":"2010-12-24 17:42:21","questions":[{"question":"1. Money is often considered to be currency plus demand deposits. If there is more money in the economy its value declines.","ID":"461","explanation":"","answers":[{"ID":"2772","answer":"True","correct":"0"},{"ID":"2773","answer":"False","correct":"0"},{"ID":"2774","answer":"Maybe","correct":"1"}]},{"question":"2. A public works program that digs holes and fills them in again has exactly the same impact on current economic growth ($-for-$) as a private investment plan which constructs a new factory.","ID":"462","explanation":"","answers":[{"ID":"2775","answer":"True","correct":"1"},{"ID":"2776","answer":"False","correct":"0"},{"ID":"2777","answer":"Maybe","correct":"0"}]},{"question":"3. Economists note that the automatic stabilisers in the government"s budget increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the budget outcome to the business cycle could be eliminated if the government followed a fiscal rule such that it had to balance its budget at all times.","ID":"463","explanation":"","answers":[{"ID":"2795","answer":"Maybe","correct":"0"},{"ID":"2794","answer":"False","correct":"1"},{"ID":"2793","answer":"True","correct":"0"}]},{"question":"4. The private and public sectors cannot both reduce their levels of indebtedness if there is an external deficit.","ID":"464","explanation":"","answers":[{"ID":"2781","answer":"True","correct":"1"},{"ID":"2782","answer":"False","correct":"0"},{"ID":"2783","answer":"Maybe","correct":"0"}]},{"question":"5. Premium Question - It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.","ID":"465","explanation":"","answers":[{"ID":"2784","answer":"True","correct":"1"},{"ID":"2785","answer":"False","correct":"0"},{"ID":"2786","answer":"Maybe","correct":"0"}]},{"question":"6. Bonus question - The population of the North Pole is:","ID":"466","explanation":"","answers":[{"ID":"2792","answer":"Bit hard to tell but Santa Claus, his partner and a few elves live there.","correct":"1"},{"ID":"2791","answer":"Zero - No-one lives on the North Pole. The North Pole sits on a floating ice shelf, and cannot support any life.","correct":"0"},{"ID":"2790","answer":"2,226 being the population of North Pole, Alaska, United States.","correct":"0"}]}]}, {"ID":"93","name":"Quiz 2011 1 - Welcome to 2011 Edition","added_on":"2010-12-31 20:52:37","questions":[{"question":"1. A rising budget deficit indicates an expansionary shift in government policy and the challenge is to ensure the nominal demand stimulus does not exceed the real capacity of the economy to respond by increasing real output.","ID":"467","explanation":"","answers":[{"ID":"2796","answer":"True","correct":"0"},{"ID":"2797","answer":"False","correct":"1"}]},{"question":"2. The imposition of taxes by the national government creates unemployment, other things equal.","ID":"468","explanation":"","answers":[{"ID":"2798","answer":"True","correct":"1"},{"ID":"2799","answer":"False","correct":"0"}]},{"question":"3. Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP.","ID":"469","explanation":"","answers":[{"ID":"2800","answer":"True","correct":"1"},{"ID":"2801","answer":"False","correct":"0"}]},{"question":"4. When economic growth resumes, the automatic stabilisers work in a counter-cyclical fashion and ensure that the government budget balance returns to its appropriate level.","ID":"470","explanation":"","answers":[{"ID":"2802","answer":"True","correct":"0"},{"ID":"2803","answer":"False","correct":"1"}]},{"question":"5. In a modern monetary economy the monetary base always adjusts to the changes in the money supply.","ID":"471","explanation":"","answers":[{"ID":"2804","answer":"True","correct":"1"},{"ID":"2805","answer":"False","correct":"0"}]},{"question":"6. Special bonus question: Santa Claus has gone home to:","ID":"472","explanation":"","answers":[{"ID":"2817","answer":"Santa Claus doesn"t have a home.","correct":"0"},{"ID":"2816","answer":"Not sure because we were asleep when he was around.","correct":"0"},{"ID":"2815","answer":"The North Pole where he lives with his partner and some elves.","correct":"1"}]}]}, {"ID":"94","name":"Quiz 2011 2","added_on":"2011-01-07 21:07:55","questions":[{"question":"1. If the national government stopped issuing public debt then its deficit spending would be more expansionary than if it matched the deficits with new debt issues.","ID":"474","explanation":"","answers":[{"ID":"2822","answer":"False","correct":"1"},{"ID":"2821","answer":"True","correct":"0"}]},{"question":"2. Non-government sector net worth does not change when the government issues debt which exactly matches ($-for-$) the increase in net public spending.","ID":"475","explanation":"","answers":[{"ID":"2824","answer":"False","correct":"0"},{"ID":"2825","answer":"Depends on whether interest is paid on reserves","correct":"0"},{"ID":"2823","answer":"True","correct":"1"}]},{"question":"3. For the wage share in GDP to remain constant, wages have to keep pace with the growth in labour productivity.","ID":"476","explanation":"","answers":[{"ID":"2826","answer":"True","correct":"0"},{"ID":"2827","answer":"False","correct":"1"},{"ID":"2828","answer":"Need more information to answer","correct":"0"}]},{"question":"4. If net exports are contributing to economic growth, then the national government has the room to run a budget surplus without impeding that growth.","ID":"477","explanation":"","answers":[{"ID":"2829","answer":"True","correct":"0"},{"ID":"2830","answer":"False","correct":"0"},{"ID":"2831","answer":"Maybe","correct":"1"}]},{"question":"5. Premium Question: A central bank can control bank lending while maintaining its target monetary policy rate by increasing the price that it charges commercial banks for reserves.","ID":"478","explanation":"","answers":[{"ID":"2832","answer":"True","correct":"0"},{"ID":"2833","answer":"False","correct":"1"}]}]}, {"ID":"95","name":"Quiz 2011 3","added_on":"2011-01-14 12:53:19","questions":[{"question":"1. A coordinated fiscal austerity plan across all nations (aiming to run budget surpluses) would not be possible without impairing growth because it is likely that the private domestic sector in some countries will desire to save overall.","ID":"479","explanation":"","answers":[{"ID":"2834","answer":"True","correct":"0"},{"ID":"2835","answer":"False","correct":"1"}]},{"question":"2. The government can always support private domestic sector saving in nominal terms by increasing the budget deficit and stimulating aggregate demand and national income.","ID":"480","explanation":"","answers":[{"ID":"2836","answer":"True ","correct":"0"},{"ID":"2837","answer":"False","correct":"1"}]},{"question":"3. The ratio of the \\\"stock of money\\\" and bank reserves has fallen dramatically in the US in recent years. This is best understood in terms of the tightly constrained credit markets due to recession.","ID":"481","explanation":"","answers":[{"ID":"2846","answer":"False","correct":"0"},{"ID":"2845","answer":"True","correct":"1"}]},{"question":"4. The higher the tax revenue, the more the government can spend.","ID":"482","explanation":"","answers":[{"ID":"2841","answer":"True","correct":"1"},{"ID":"2842","answer":"False","correct":"0"}]},{"question":"5. Premium question: A sovereign national government cannot generate full employment without taxation.","ID":"483","explanation":"","answers":[{"ID":"2843","answer":"True","correct":"1"},{"ID":"2844","answer":"False","correct":"0"}]}]}, {"ID":"96","name":"Quiz 2011 4","added_on":"2011-01-21 08:28:47","questions":[{"question":"1. If economy-wide average nominal wages fail to keep pace with the inflation rate then it means the profit share in GDP is rising.n","ID":"484","explanation":"","answers":[{"ID":"2858","answer":"False","correct":"1"},{"ID":"2857","answer":"True","correct":"0"}]},{"question":"2. The net worth of the non-government sector would not alter if the government issued bonds to exactly match ($-for-$) the increase in net public spending or not.","ID":"485","explanation":"","answers":[{"ID":"2860","answer":"False","correct":"0"},{"ID":"2859","answer":"True","correct":"1"}]},{"question":"3. The wider the spread between the price the central bank sets on the reserves it provides the commercial banks on demand (so-called penalty rates) and the target policy rate the more difficult it becomes for the central bank to ensure the quantity of reserves is appropriate for maintaining its target policy rate.","ID":"486","explanation":"","answers":[{"ID":"2862","answer":"False","correct":"0"},{"ID":"2861","answer":"True","correct":"1"}]},{"question":"4. Assume that a national is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would always find:","ID":"487","explanation":"","answers":[{"ID":"2868","answer":"Cannot tell because we don"t know the scale of the private domestic sector saving as a % of GDP.","correct":"0"},{"ID":"2866","answer":"A public budget deficit.","correct":"1"},{"ID":"2867","answer":"A public budget surplus.","correct":"0"}]},{"question":"5. Premium question: At present inflation and nominal interest rates are low and constant) so assume they are both zero and constant. Consider a country with a public debt to GDP ratio of 100 per cent which the mainstream economists consider to be dangerously high. The mainstream prescription is to run primary budget surpluses to stabilise and then reduce the debt ratio. Under the circumstances given, this strategy will only work if there is real GDP growth.","ID":"488","explanation":"","answers":[{"ID":"2870","answer":"False","correct":"1"},{"ID":"2869","answer":"True","correct":"0"}]}]}, {"ID":"97","name":"Quiz 2011 5","added_on":"2011-01-27 08:24:47","questions":[{"question":"1. A fact that is overlooked by those promoting austerity programs, is that when economic growth resumes, the automatic stabilisers work in a counter-cyclical fashion to ensure that the government budget balance returns to its appropriate level.","ID":"489","explanation":"","answers":[{"ID":"2871","answer":"True","correct":"0"},{"ID":"2872","answer":"False","correct":"1"}]},{"question":"2. From a monetary perspective, it would be impossible for a central bank to directly purchase Treasury debt to facilitate a national government"s budget deficit while still targeting a non-zero policy rate.","ID":"490","explanation":"","answers":[{"ID":"2873","answer":"True","correct":"0"},{"ID":"2874","answer":"False","correct":"1"}]},{"question":"3. When a sovereign government issues debt it logically:","ID":"491","explanation":"","answers":[{"ID":"2875","answer":"increases the assets that are held by the non-government sector $-for-$. ","correct":"0"},{"ID":"2876","answer":"has no impact on the overall holdings of assets held by the non-government sector $-for-$","correct":"1"},{"ID":"2877","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"}]},{"question":"4. Rising government bond yields for new issues indicate:","ID":"492","explanation":"","answers":[{"ID":"2878","answer":"(a) that government spending is becoming more expensive.","correct":"0"},{"ID":"2879","answer":"(b) that economic growth is reducing private risk assessments of alternative financial investments.","correct":"0"},{"ID":"2880","answer":"(c) that government spending is increasing the cost of borrowing for private investors.","correct":"0"},{"ID":"2881","answer":"(d) that private investors consider public debt to be riskier","correct":"0"},{"ID":"2882","answer":"(e) Answers (a) and (d) depending on the situation.","correct":"0"},{"ID":"2883","answer":"(f) Answers (b) and (d) depending on the situation.","correct":"1"}]},{"question":"5. Premium question: If private households and firms decide to lift their saving ratio the national government has to increase its net spending (deficit) to fill the spending gap or else economic activity will slow down. ","ID":"493","explanation":"","answers":[{"ID":"2887","answer":"False ","correct":"1"},{"ID":"2886","answer":"True","correct":"0"}]}]}, {"ID":"98","name":"Quiz 2011 6","added_on":"2011-02-04 21:04:59","questions":[{"question":"1. When a government such as the US government voluntarily constrains itself by issuing debt to match $-for-$ its net spending position (deficit), it reduces the funds available to the private sector for their own spending.","ID":"494","explanation":"","answers":[{"ID":"2888","answer":"True","correct":"0"},{"ID":"2889","answer":"False","correct":"1"}]},{"question":"2. When the national government"s budget balance moves into surplus:","ID":"495","explanation":"","answers":[{"ID":"2890","answer":"it is a sign that the government is trying to constrain economic activity.","correct":"0"},{"ID":"2891","answer":"it is a sign that the government is worried that inflation is rising.","correct":"0"},{"ID":"2892","answer":"you cannot conclude anything about the government"s policy intentions.","correct":"1"},{"ID":"2893","answer":"Options (a) and (b).","correct":"0"}]},{"question":"3. If the external balance remains in surplus, then the national government will not impede economic growth by running a budget surplus.","ID":"496","explanation":"","answers":[{"ID":"2902","answer":"False","correct":"1"},{"ID":"2901","answer":"True","correct":"0"}]},{"question":"4. Fiscal rules such as are embodied in the Stability and Growth Pact of the EMU will continually create conditions of slower growth because they deprive the government of fiscal flexibility to support aggregate demand when necessary. ","ID":"497","explanation":"","answers":[{"ID":"2904","answer":"False ","correct":"1"},{"ID":"2903","answer":"True","correct":"0"}]},{"question":"5. Premium question: In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 1 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The government"s budget balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 3 per cent. In Year 2, the government stimulates the economy and pushes the primary budget deficit out to 2 per cent of GDP and in doing so stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio will rise but by an amount less than the rise in the budget deficit because of the real growth in the economy.","ID":"498","explanation":"","answers":[{"ID":"2898","answer":"True","correct":"0"},{"ID":"2899","answer":"False","correct":"1"},{"ID":"2900","answer":"Not enough information to make a conclusion","correct":"0"}]}]}, {"ID":"99","name":"Quiz 2011 7","added_on":"2011-02-11 09:58:00","questions":[{"question":"1. The central bank can influence the supply of money via the price it provides reserves to the commercial banks but this influence is compromised by the level at which it sets the target monetary policy rate.","ID":"499","explanation":"","answers":[{"ID":"2916","answer":"False","correct":"0"},{"ID":"2915","answer":"True","correct":"1"}]},{"question":"2. If the private domestic sector spends less than it earns and the nation runs a small external deficit, then the government budget will always be in deficit at all levels of national income.","ID":"500","explanation":"","answers":[{"ID":"2918","answer":"False","correct":"0"},{"ID":"2917","answer":"True","correct":"1"}]},{"question":"3. Under current institutional arrangements, a central bank can easily purchase treasury debt directly to satisfy accounting arrangements relating to the national governments budget deficit (that is, \\\"monetise the deficit\\\") while still targeting a positive short-term policy rate.","ID":"501","explanation":"","answers":[{"ID":"2920","answer":"False","correct":"0"},{"ID":"2919","answer":"True","correct":"1"}]},{"question":"4. In a stock-flow consistent macroeconomics, we know that flows during a period add to relevant stocks at the end of the period. Accordingly, government spending and private consumption spending are two examples of spending flows that add to the stock of aggregate demand which in turn impacts on Gross Domestic Product (National Income) because spending equals income.","ID":"502","explanation":"","answers":[{"ID":"2922","answer":"False","correct":"1"},{"ID":"2921","answer":"True","correct":"0"}]},{"question":"5. Premium question: Assume the current public debt to GDP ratio is 100 per cent and that central banks keep nominal interest rates and inflation constant and zero. Governments that promote fiscal austerity claim they can reduce the the public debt to GDP ratio by pushing the primary budget into surplus even if the public spending contraction creates a negative real GDP growth rate. Under the circumstances outlined, this claim is correct.n","ID":"503","explanation":"","answers":[{"ID":"2924","answer":"False","correct":"0"},{"ID":"2923","answer":"True","correct":"1"}]}]}, {"ID":"100","name":"Quiz 2011 8 - Special 100th Edition","added_on":"2011-02-18 15:37:20","questions":[{"question":"1. If a sovereign national government runs a balanced budget (on average) over a business cycle, then the average private domestic deficit (surplus) will always be exactly equal to the average external deficit (surplus) over the same cycle.","ID":"504","explanation":"","answers":[{"ID":"2925","answer":"True","correct":"1"},{"ID":"2926","answer":"False","correct":"0"},{"ID":"2927","answer":"Maybe - more information is required","correct":"0"}]},{"question":"2. Excessive real wages growth can cause unemployment.","ID":"505","explanation":"","answers":[{"ID":"2928","answer":"True","correct":"1"},{"ID":"2929","answer":"False","correct":"0"}]},{"question":"3. For workers to get a rising share of national income their nominal wages have to grow faster than inflation.","ID":"506","explanation":"","answers":[{"ID":"2930","answer":"True","correct":"0"},{"ID":"2931","answer":"False","correct":"1"}]},{"question":"4. Modern Monetary Theory implies that higher levels of taxation are not necessary for the government to spend more in real terms.","ID":"507","explanation":"","answers":[{"ID":"2938","answer":"False","correct":"1"},{"ID":"2937","answer":"True","correct":"0"}]},{"question":"5. Premium question: After a deep recession, governments wanting to reduce their unemployment rates should use expansionary fiscal policy to get real GDP growth back on trend.","ID":"508","explanation":"","answers":[{"ID":"2934","answer":"True","correct":"0"},{"ID":"2935","answer":"False","correct":"0"},{"ID":"2936","answer":"Maybe","correct":"1"}]}]}, {"ID":"101","name":"Quiz 2011 9","added_on":"2011-02-25 15:22:26","questions":[{"question":"1. A Fiscal Risk index which measures the vulnerability of a nation to public debt default is never applicable to a national government which issues its own floating currency.","ID":"509","explanation":"","answers":[{"ID":"2950","answer":"False","correct":"1"},{"ID":"2949","answer":"True","correct":"0"}]},{"question":"2. The central bank cannot directly purchase treasury debt to facilitate the national governments budget deficit (that is, \\\"monetise the deficit\\\") if it targets a positive short-term policy rate.","ID":"510","explanation":"","answers":[{"ID":"2952","answer":"False","correct":"1"},{"ID":"2951","answer":"True","correct":"0"}]},{"question":"3. Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the difference between government spending and tax revenue (the \\\"primary deficit\\\") plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP.","ID":"511","explanation":"","answers":[{"ID":"2958","answer":"False","correct":"0"},{"ID":"2957","answer":"True","correct":"1"}]},{"question":"4. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"512","explanation":"","answers":[{"ID":"2962","answer":"False","correct":"1"},{"ID":"2961","answer":"True","correct":"0"}]},{"question":"5. Premium question: Quantitative easing and an expansion of net public spending both add net financial assets to the non-government sector but the former aims to stimulate demand by lowering interest rates while the latter policy choice more directly adds demand to the system.","ID":"513","explanation":"","answers":[{"ID":"2966","answer":"False","correct":"1"},{"ID":"2965","answer":"True","correct":"0"}]}]}, {"ID":"102","name":"Quiz 2011 10","added_on":"2011-03-04 05:57:40","questions":[{"question":"1. The US federal government can run a balanced budget over the business cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will only be in surplus if the external balance is in surplus.","ID":"514","explanation":"","answers":[{"ID":"2980","answer":"False","correct":"0"},{"ID":"2979","answer":"True","correct":"1"}]},{"question":"2. A basic understanding of Modern Monetary Theory (MMT) would leave you to conclude that excessive real wage demands by workers can cause unemployment.","ID":"515","explanation":"","answers":[{"ID":"2982","answer":"False","correct":"0"},{"ID":"2981","answer":"True","correct":"1"}]},{"question":"3. Modern Monetary Theory (MMT) teaches us that a sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues:","ID":"516","explanation":"","answers":[{"ID":"2983","answer":"the less is the volume of investment funds in the non-government sector that can be used for other investments.","correct":"0"},{"ID":"2984","answer":"the greater is non-government wealth held in the form of public debt.","correct":"1"},{"ID":"2985","answer":"the more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"}]},{"question":"4. A budget surplus indicates that the national government is","ID":"517","explanation":"","answers":[{"ID":"2991","answer":"you cannot conclude anything about the government"s policy intentions.","correct":"1"},{"ID":"2990","answer":"trying to reduce public debt","correct":"0"},{"ID":"2989","answer":"trying to slow the economy down and contain inflation.nn","correct":"0"}]},{"question":"5. Premium Question: The Australian government is aiming to get real GDP growth back on the trend that was observed over the last decade - around 3 per cent per annum. If labour productivity grows at 1.5 per cent per annum and the labour force grows at 2 per cent per annum and the average working week is constant in hours, then this policy (if successful) will see the unemployment rate rising.","ID":"518","explanation":"","answers":[{"ID":"2978","answer":"False","correct":"0"},{"ID":"2977","answer":"True","correct":"1"}]}]}, {"ID":"103","name":"Quiz 2011 11","added_on":"2011-03-11 18:29:49","questions":[{"question":"1. A program of fiscal austerity may not undermine attempts by the private domestic sector to reduce its indebtedness.","ID":"519","explanation":"","answers":[{"ID":"3003","answer":"False","correct":"0"},{"ID":"3002","answer":"True","correct":"1"}]},{"question":"2. The public debt ratio is of no concern because it falls once economic growth resumes.","ID":"520","explanation":"","answers":[{"ID":"3009","answer":"False","correct":"1"},{"ID":"3008","answer":"True ","correct":"0"}]},{"question":"3. The money multiplier is in fact more correctly considered to be a divisor relating the monetary base to the money supply.","ID":"521","explanation":"","answers":[{"ID":"3011","answer":"False","correct":"0"},{"ID":"3010","answer":"True","correct":"1"}]},{"question":"4. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):nnnn","ID":"522","explanation":"","answers":[{"ID":"3012","answer":"A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"3013","answer":"nA nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"3014","answer":"A nation can run a current account deficit with a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"3015","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]},{"question":"5. Premium Question: The expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance compared to a situation when it issued no debt.","ID":"523","explanation":"","answers":[{"ID":"3017","answer":"False","correct":"1"},{"ID":"3016","answer":"True","correct":"0"}]}]}, {"ID":"104","name":"Quiz 2011 12","added_on":"2011-03-18 15:13:39","questions":[{"question":"1. The Quantity Theory of Money considers that growth in the stock of money will be inflationary. The fact that the large-scale quantitative easing (so-called printing money) in many nations in recent years has not generated inflation demonstrates that the mainstream Quantity Theory of Money is incorrect.","ID":"524","explanation":"","answers":[{"ID":"3031","answer":"False","correct":"1"},{"ID":"3030","answer":"True","correct":"0"}]},{"question":"2. Governments pursuing fiscal austerity desire to reduce their public debt ratios. While that desire is ill-founded the strategy will achieve that end but at the cost of higher unemployment.n","ID":"525","explanation":"","answers":[{"ID":"3033","answer":"False","correct":"1"},{"ID":"3032","answer":"True","correct":"0"}]},{"question":"3. The Confederate government in 1861 could have eased the inflationary impact of its war spending by issuing more bonds than it did.","ID":"526","explanation":"","answers":[{"ID":"3035","answer":"False","correct":"1"},{"ID":"3034","answer":"True","correct":"0"}]},{"question":"4. A recent Bloomberg report on the British economy says that \\\"the government has staked its reputation on eliminating the budget deficit ... by the time of the next election in 2015\\\". The current deficit to GDP ratio is around 10 per cent. The declining deficit to GDP ratio will signal the discretionary contraction in net public spending.n","ID":"527","explanation":"","answers":[{"ID":"3041","answer":"False","correct":"1"},{"ID":"3040","answer":"True","correct":"0"}]},{"question":"5. Premium Question: When net exports are negative, government deficits will be required if the private domestic sector is to save overall.","ID":"528","explanation":"","answers":[{"ID":"3045","answer":"False","correct":"0"},{"ID":"3044","answer":"True","correct":"1"}]}]}, {"ID":"105","name":"Quiz 2011 13","added_on":"2011-03-26 09:00:46","questions":[{"question":"1. Modern Monetary Theory tells us that a sovereign national government can run deficits without issuing debt. But the debt issuance allows the government to drain demand (private spending capacity) so that the public spending has more non-inflationary room to work within.","ID":"529","explanation":"","answers":[{"ID":"3061","answer":"False","correct":"1"},{"ID":"3060","answer":"True","correct":"0"}]},{"question":"2. Workers can enjoy a stable share of GDP over time if they secure wage increases in line with the growth in their contribution to production.","ID":"530","explanation":"","answers":[{"ID":"3063","answer":"False","correct":"1"},{"ID":"3062","answer":"True","correct":"0"}]},{"question":"3. The ratio of the \\\"stock of money\\\" (currency plus demand deposits) to bank reserves has fallen dramatically in the US in recent years. This tells us that the money multiplier is not constant.","ID":"531","explanation":"","answers":[{"ID":"3065","answer":"False","correct":"1"},{"ID":"3064","answer":"True","correct":"0"}]},{"question":"4. The level of tax revenue has no bearing on the real spending capacity of a sovereign government.","ID":"532","explanation":"","answers":[{"ID":"3067","answer":"False","correct":"1"},{"ID":"3066","answer":"True","correct":"0"}]},{"question":"5. Premium Question: The government and the private domestic sectors cannot simultaneously reduce their debt levels (under current public sector debt-issuance arrangements)","ID":"533","explanation":"","answers":[{"ID":"3059","answer":"False","correct":"1"},{"ID":"3058","answer":"True","correct":"0"}]}]}, {"ID":"106","name":"Quiz 2011 14","added_on":"2011-04-01 20:57:12","questions":[{"question":"1. Eurozone nations can only alter their international competitiveness by reducing domestic wages and prices because they no longer have a floating currency.n","ID":"534","explanation":"","answers":[{"ID":"3079","answer":"False","correct":"1"},{"ID":"3078","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) refutes the claim that government spending can crowd out private spending.","ID":"535","explanation":"","answers":[{"ID":"3085","answer":"True","correct":"0"},{"ID":"3086","answer":"False","correct":"1"}]},{"question":"3. In general, the OECD and IMF estimates of the impact of the automatic stabilisers are biased downwards.","ID":"536","explanation":"","answers":[{"ID":"3084","answer":"False","correct":"0"},{"ID":"3083","answer":"True","correct":"1"}]},{"question":"4. If there is an external deficit, efforts by the private domestic sector to increase its overall saving as a percentage of GDP, will ensure the government budget is in deficit, irrespective of what the government desires.","ID":"537","explanation":"","answers":[{"ID":"3088","answer":"False","correct":"0"},{"ID":"3087","answer":"True","correct":"1"}]},{"question":"5. Premium Question: When a government runs a continuous budget deficit public spending builds up over time and eventually exposes the economy to inflation risk.","ID":"538","explanation":"","answers":[{"ID":"3089","answer":"True","correct":"0"},{"ID":"3090","answer":"False","correct":"1"}]}]}, {"ID":"107","name":"Quiz 2011 15","added_on":"2011-04-08 11:57:48","questions":[{"question":"1. When there is an external deficit, the private sector can reduce its overall indebtedness as long as the government supports saving by running a deficit.","ID":"539","explanation":"","answers":[{"ID":"3113","answer":"False","correct":"1"},{"ID":"3112","answer":"True","correct":"0"}]},{"question":"2. Taxation is an essential part of a fiat monetary system and allows the national government to spend.","ID":"540","explanation":"","answers":[{"ID":"3104","answer":"False","correct":"0"},{"ID":"3103","answer":"True","correct":"0"},{"ID":"3105","answer":"Maybe","correct":"1"}]},{"question":"3. When a sovereign government issues debt it has no impact on the overall holdings of assets held by the non-government sector.","ID":"541","explanation":"","answers":[{"ID":"3107","answer":"False","correct":"0"},{"ID":"3106","answer":"True","correct":"1"}]},{"question":"4. 10-year bond yields in Japan and the US have risen slightly in the last week suggesting that bond markets are demanding increased risk coverage for these assets.","ID":"542","explanation":"","answers":[{"ID":"3109","answer":"False","correct":"1"},{"ID":"3108","answer":"True","correct":"0"}]},{"question":"5. Premium question: Many countries are facing higher public debt to GDP ratios as a consequence of the crisis and some are approaching 100 per cent. Assume the current public debt to GDP ratio is 100 per cent and that central banks keep nominal interest rates and inflation constant and zero. The proponents of fiscal austerity say that by running primary surpluses they can reduce the public debt to GDP ratio even if they create a short-term recession and invoke the automatic stabilisers (which push the budget towards deficit). However, they also claim that it is likely that their strategy will promote growth. The austerity strategy cannot reduce the debt ratio (under our assumptions) if a recession results.","ID":"543","explanation":"","answers":[{"ID":"3115","answer":"False","correct":"1"},{"ID":"3114","answer":"True","correct":"0"}]}]}, {"ID":"108","name":"Quiz 2011 16","added_on":"2011-04-15 09:19:15","questions":[{"question":"1. A declining budget deficit tells us that the government is pursuing a more contractionary fiscal policy stance.","ID":"544","explanation":"","answers":[{"ID":"3140","answer":"False","correct":"1"},{"ID":"3139","answer":"True","correct":"0"},{"ID":"3141","answer":"Maybe","correct":"0"}]},{"question":"2. If the household saving ratio rises and there is an external deficit then government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"545","explanation":"","answers":[{"ID":"3143","answer":"False","correct":"1"},{"ID":"3142","answer":"True","correct":"0"}]},{"question":"3. Imposing some positive minimum reserve requirements for private banks provides some constraint on their credit creation activities.","ID":"546","explanation":"","answers":[{"ID":"3145","answer":"False","correct":"1"},{"ID":"3144","answer":"True","correct":"0"},{"ID":"3146","answer":"Maybe","correct":"0"}]},{"question":"4. Real government spending can be higher if they raise more tax revenue.","ID":"547","explanation":"","answers":[{"ID":"3149","answer":"Maybe","correct":"1"},{"ID":"3148","answer":"False","correct":"0"},{"ID":"3147","answer":"True","correct":"0"}]},{"question":"5. Premium Question: When a currency-issuing government voluntarily constrains itself to borrow from the private sector to cover its net spending (deficits) position, it substitutes public spending for the borrowed private funds which reduces the funds available for private sector borrowing.","ID":"548","explanation":"","answers":[{"ID":"3151","answer":"False","correct":"1"},{"ID":"3150","answer":"True","correct":"0"},{"ID":"3152","answer":"Maybe","correct":"0"}]}]}, {"ID":"109","name":"Quiz 2011 16 - Easter Holiday quiz","added_on":"2011-04-22 21:28:25","questions":[{"question":"1. Even Modern Monetary Theory accepts that continually expanding the money supply will inevitably be inflationary.","ID":"549","explanation":"","answers":[{"ID":"3164","answer":"False","correct":"1"},{"ID":"3163","answer":"True","correct":"0"}]},{"question":"2. If there is an external deficit of 2 per cent of GDP and the government balances its budget then the private sector will have:","ID":"550","explanation":"","answers":[{"ID":"3181","answer":"Cannot really tell definitively without further information.","correct":"0"},{"ID":"3180","answer":"a deficit in spending relative to its income equal to 2 per cent of GDP.","correct":"0"},{"ID":"3179","answer":"an excess of spending relative to its income equal to 2 per cent of GDP.","correct":"1"}]},{"question":"3. By draining funds out of the system, government borrowing from the private sector reduces the risk that public spending will overheat the economy.","ID":"551","explanation":"","answers":[{"ID":"3175","answer":"False","correct":"1"},{"ID":"3174","answer":"True","correct":"0"}]},{"question":"4. A national government would be unable to rely on the central bank purchasing treasury debt to match its budget deficit (that is, \\\"monetise the deficit\\\") if the central bank is targeting a positive short-term policy rate.","ID":"552","explanation":"","answers":[{"ID":"3177","answer":"False","correct":"1"},{"ID":"3176","answer":"True","correct":"0"},{"ID":"3178","answer":"Maybe","correct":"0"}]},{"question":"5. Premium Question - In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 1 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The government"s budget balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 3 per cent. In Year 2, the government stimulates the economy and pushes the primary budget deficit out to 2 per cent of GDP and in doing so stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio:nnnn","ID":"553","explanation":"","answers":[{"ID":"3170","answer":"rises by 1 per cent.","correct":"0"},{"ID":"3171","answer":"falls by 1 per cent.","correct":"0"},{"ID":"3172","answer":"falls but you cannot tell by how much from this information","correct":"0"},{"ID":"3173","answer":"none of the above.","correct":"1"}]}]}, {"ID":"110","name":"Quiz 2011 17","added_on":"2011-04-29 10:16:41","questions":[{"question":"1 National accounting shows us that a government surplus equals a non-government deficit. If the British government is successful in putting its budget back into surplus then the private domestic sector will become more indebted as a consequence which means that austerity amounts to swapping public for private debt.","ID":"554","explanation":"","answers":[{"ID":"3195","answer":"False","correct":"1"},{"ID":"3194","answer":"True","correct":"0"}]},{"question":"2. The relentless push by neo-liberals to cut real wages growth has allowed the share of national income going to profits to expand over the last 30 years in many nations.","ID":"555","explanation":"","answers":[{"ID":"3203","answer":"False","correct":"1"},{"ID":"3202","answer":"True","correct":"0"}]},{"question":"3. If the stock of aggregate demand growth outstrips the capacity of the productive sector to respond by producing extra real goods and services then inflation is inevitable.","ID":"556","explanation":"","answers":[{"ID":"3213","answer":"False","correct":"1"},{"ID":"3212","answer":"True","correct":"0"}]},{"question":"4. The Australian dollar is currently appreciating strongly against many of the key currencies and this has put pressure on our international competitiveness. Export competitiveness will be restored under these conditions if local workers accept a cut in nominal wages and the rate of inflation is contained.","ID":"557","explanation":"","answers":[{"ID":"3211","answer":"False","correct":"1"},{"ID":"3210","answer":"True","correct":"0"}]},{"question":"5: Premium question: The US Federal Reserve this week put out its updated projections which provide \\\"central tendency\\\" estimates of real GDP growth between 3.5 and 4.3 per cent in 2013. Their lowest estimate for 2013 was 3 per cent per annum. Assuming the current labour productivity growth continues (around 2 per cent per annum) and the labour force growth resumes more normal rates (around 1.4 per cent per annum) by 2013 and the average working week is constant in hours, then one consequence of the difference between the lower bound of the central tendency projections and their lowest estimate will be that the unemployment rate will fall more slowly in 2013 if the the latter projection is true.","ID":"558","explanation":"","answers":[{"ID":"3199","answer":"False","correct":"1"},{"ID":"3198","answer":"True","correct":"0"}]}]}, {"ID":"111","name":"Quiz 2011 18","added_on":"2011-05-06 17:40:40","questions":[{"question":"1. If a nation records an external balance (net exports equal zero) then the government can safely run a balanced public budget without undermining the capacity of the private domestic sector to save overall.","ID":"559","explanation":"","answers":[{"ID":"3240","answer":"False","correct":"1"},{"ID":"3239","answer":"True","correct":"0"}]},{"question":"2. If the external sector is in deficit overall and GDP growth rate is lower than the real interest rate, then:","ID":"560","explanation":"","answers":[{"ID":"3243","answer":"Neither the private domestic sector or the government sector overall can pay down their debt liabilities.","correct":"0"},{"ID":"3242","answer":"Either the private domestic sector or the government sector overall can pay down their debt liabilities.n","correct":"1"},{"ID":"3241","answer":"Both the private domestic sector and the government sector overall can pay down their respective debt liabilities.n","correct":"0"}]},{"question":"3. The standard of living of workers falls if growth in real wages fails to keep pace with labour productivity growth.","ID":"561","explanation":"","answers":[{"ID":"3238","answer":"False","correct":"1"},{"ID":"3237","answer":"True","correct":"0"}]},{"question":"4. Rising private domestic saving overall signals the need for an expanding public deficit to avoid employment losses.","ID":"562","explanation":"","answers":[{"ID":"3236","answer":"False","correct":"1"},{"ID":"3235","answer":"True","correct":"0"}]},{"question":"5. Premium Question: From the US National Accounts, you find that in 2006, the share of Personal consumption expenditure in real GDP was 69.9 per cent and by 2008 it had fallen to 69.8 per cent. Similarly, the share of Gross private domestic investment on real GDP was 17.2 per cent in 2006 and by 2008 had fallen to 14.9 per cent (and further to 11.8 per cent in 2009). The net export deficit over the same period (2006 to 2008) fell from -5.7 per cent of real GDP to -4.9 per cent in 2008. Finally, the share of Government consumption expenditures and gross investment in real GDP rose from 18.8 per cent in 2006 to 18.9 per cent in 2008 (and 19.7 per cent in 2009). These relative changes confirm that real GDP was lower in 2008 compared to 2006 because the increase in Government spending and the falling negative contribution of net exports were not sufficient to offset the declining contribution from consumption and investment.","ID":"563","explanation":"","answers":[{"ID":"3234","answer":"False","correct":"1"},{"ID":"3233","answer":"True","correct":"0"}]}]}, {"ID":"112","name":"Quiz 2011 19","added_on":"2011-05-13 12:05:53","questions":[{"question":"1. As long as employment growth keeps pace with labour force growth, unemployment will not rise.","ID":"564","explanation":"","answers":[{"ID":"3271","answer":"False","correct":"1"},{"ID":"3270","answer":"True","correct":"0"}]},{"question":"2. When a government issues debt it creates more non-inflationary space for itself to spend than if it spent without issuing debt.","ID":"565","explanation":"","answers":[{"ID":"3265","answer":"False","correct":"1"},{"ID":"3264","answer":"True","correct":"0"}]},{"question":"3. The non-government sector is wealthier when the government matches it deficit with new debt issues.","ID":"566","explanation":"","answers":[{"ID":"3263","answer":"False","correct":"1"},{"ID":"3262","answer":"True","correct":"0"}]},{"question":"4. If net exports are running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must:n","ID":"567","explanation":"","answers":[{"ID":"3261","answer":"Be running a deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"3260","answer":"Be running a deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"3259","answer":"Be running a surplus equal to 5 per cent of GDP.","correct":"0"},{"ID":"3258","answer":"Be running a surplus equal to 1 per cent of GDP.","correct":"0"}]},{"question":"5. Premium Question: Fiscal austerity programs (which try to create primary budget surpluses) are likely to thwart the chances of a government reducing its public debt as a proportion of GDP because they are likely to reduce real GDP growth which, then drives the budget deficit up via the automatic stabilisers.","ID":"568","explanation":"","answers":[{"ID":"3269","answer":"False","correct":"1"},{"ID":"3268","answer":"True","correct":"0"}]}]}, {"ID":"113","name":"Quiz 2011 20","added_on":"2011-05-20 11:43:19","questions":[{"question":"1. Central banks provide reserves to the commercial banking system at some penalty rate. However, this compromises their capacity to control bank lending and target a given monetary policy rate.","ID":"569","explanation":"","answers":[{"ID":"3291","answer":"False","correct":"0"},{"ID":"3290","answer":"True","correct":"1"}]},{"question":"2. If inflation is maintained at a rate equal to the interest rate, then the government deficit as a proportion of GDP could double (say from 2 to 4 per cent) without pushing up the public debt ratio.","ID":"570","explanation":"","answers":[{"ID":"3293","answer":"False","correct":"0"},{"ID":"3292","answer":"True","correct":"1"}]},{"question":"3. The IMF are hoping that Greece will recover on the back of an export boom and this will provide the capacity for the government to reduce its budget deficit without compromising real economic growth. If Greece actually achieves positive net exports then the IMF strategy will be seen as working.","ID":"571","explanation":"","answers":[{"ID":"3299","answer":"False","correct":"1"},{"ID":"3298","answer":"True","correct":"0"}]},{"question":"4. The wage share in national income in many nations has fallen over the neo-liberal period. A declining wage share does not mean the real standard of living for workers is falling.","ID":"572","explanation":"","answers":[{"ID":"3297","answer":"False","correct":"0"},{"ID":"3296","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current interest rate target. If on average the government collects an income tax of 20 cents in the dollar, then total tax revenue will rise by 0.20 times $x if government spending increases (once and for all) by $X dollars and private investment and exports remain unchanged.","ID":"573","explanation":"","answers":[{"ID":"3289","answer":"False","correct":"1"},{"ID":"3288","answer":"True","correct":"0"}]}]}, {"ID":"114","name":"Quiz 2011 21","added_on":"2011-05-29 00:30:55","questions":[{"question":"1. A sovereign national government has to raise tax revenue to allow it to fulfill its political mandate.","ID":"574","explanation":"","answers":[{"ID":"3300","answer":"True","correct":"1"},{"ID":"3301","answer":"False","correct":"0"}]},{"question":"2. Assume that the national accounts of a nation is reveal that its external surplus is equivalent to 2 per cent of GDP and the private domestic sector is saving overall 3 per cent of GDP. We would also observe:","ID":"575","explanation":"","answers":[{"ID":"3302","answer":"A budget deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"3303","answer":"A budget surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"3304","answer":"A budget deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"3305","answer":"A budget surplus equal to 5 per cent of GDP.","correct":"0"}]},{"question":"3. While bank lending is capital constrained a further constraint on excess lending would be created by regulators if a 100 per cent reserve ratio (that is, all loans had to be backed by reserves) was imposed.","ID":"576","explanation":"","answers":[{"ID":"3306","answer":"True","correct":"0"},{"ID":"3307","answer":"False","correct":"1"}]},{"question":"4. Recipients of income support provided by the national government are living off the hard work of those who pay income taxes.","ID":"577","explanation":"","answers":[{"ID":"3308","answer":"True","correct":"1"},{"ID":"3309","answer":"False","correct":"0"}]},{"question":"5. Premium Question: Assume the current public debt to GDP ratio is 100 per cent and that the nominal interest rate and the inflation rate remain constant and zero. Under these circumstances it is impossible to reduce a public debt to GDP ratio, using an austerity package if the rise in the primary surplus to GDP ratio is always exactly offset by negative GDP growth rate of the same percentage value.","ID":"578","explanation":"","answers":[{"ID":"3310","answer":"True ","correct":"1"},{"ID":"3311","answer":"False","correct":"0"}]}]}, {"ID":"115","name":"Quiz 2011 22","added_on":"2011-06-03 18:15:51","questions":[{"question":"1. Start from a situation where the external surplus is the equivalent of 2 per cent of GDP and the budget surplus is 2 per cent. If the budget balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then:","ID":"579","explanation":"","answers":[{"ID":"3348","answer":"National income falls and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"},{"ID":"3347","answer":"National income remains unchanged and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"},{"ID":"3346","answer":"National income rises and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"1"},{"ID":"3345","answer":"National income falls and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"3344","answer":"National income remains unchanged and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"3343","answer":"National income rises and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"}]},{"question":"2. A rising budget deficit indicates that discretionary fiscal policy is expansionary.","ID":"580","explanation":"","answers":[{"ID":"3332","answer":"False","correct":"1"},{"ID":"3331","answer":"True","correct":"0"}]},{"question":"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.n","ID":"581","explanation":"","answers":[{"ID":"3334","answer":"False","correct":"1"},{"ID":"3333","answer":"True","correct":"0"}]},{"question":"4. If private households and firms decide to lift their saving ratio the national government has to increase its net spending (deficit) to fill the spending gap or else economic activity will slow down.","ID":"582","explanation":"","answers":[{"ID":"3336","answer":"False","correct":"1"},{"ID":"3335","answer":"True","correct":"0"}]},{"question":"5. Premium Question: In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 2 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 2 per cent (and this is the rate the government pays on all outstanding debt). The government"s budget balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 4 per cent. In Year 2, the government stimulates the economy and pushes the primary budget deficit out to 4 per cent of GDP in recognition of the severity of the recession. In doing so it stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. The central bank holds the nominal interest rate constant but inflation falls to 1 per cent given the slack nature of the economy the previous year. Under these circumstances, the public debt ratio falls even though the budget deficit has risen because of the real growth in the economy.","ID":"583","explanation":"","answers":[{"ID":"3323","answer":"False","correct":"1"},{"ID":"3322","answer":"True","correct":"0"},{"ID":"3324","answer":"Cannot determine without more information","correct":"0"}]}]}, {"ID":"116","name":"Quiz 2011 23","added_on":"2011-06-10 11:43:27","questions":[{"question":"1. The issuance of bonds by the government to match its net spending (budget deficit) augments the nominal wealth held by the non-government sector.n","ID":"584","explanation":"","answers":[{"ID":"3360","answer":"False","correct":"1"},{"ID":"3359","answer":"True","correct":"0"}]},{"question":"2. Ignoring any reserve requirements, a central bank will eliminate any need to conduct open market operations to ensure its target policy rate is achieved each day by paying a positive interest rate on overnight reserves. ","ID":"585","explanation":"","answers":[{"ID":"3373","answer":"True","correct":"0"},{"ID":"3374","answer":"False","correct":"1"}]},{"question":"3. Ignoring any reserve requirements, bank reserves will be higher than otherwise if the central bank pays a positive return on overnight reserves held by the commercial banks equal to its current policy rate.","ID":"586","explanation":"","answers":[{"ID":"3378","answer":"False","correct":"0"},{"ID":"3377","answer":"True","correct":"1"}]},{"question":"4. When a country runs a small current account deficit and the private sector is saving overall, the government budget balance will always be in deficit.","ID":"587","explanation":"","answers":[{"ID":"3376","answer":"False","correct":"0"},{"ID":"3375","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Various governments are imposing austerity budgets on their economies. In Britain and the US, even \\\"progressives\\\"are supporting cutting net spending but prefer to focus on tax increases while the \\\"conservatives\\\" are recommending spending cuts and privatisation. In terms of the initial impact on national income, which policy option will be more damaging - a tax increase which aims to increase tax revenue at the current level of national income by $x or a spending cut of $x?","ID":"588","explanation":"","answers":[{"ID":"3371","answer":"Both will have the same impact","correct":"0"},{"ID":"3370","answer":"Spending cut","correct":"1"},{"ID":"3369","answer":"Tax increase","correct":"0"},{"ID":"3372","answer":"There is not enough information to answer the question","correct":"0"}]}]}, {"ID":"117","name":"Quiz 2011 24","added_on":"2011-06-17 10:16:03","questions":[{"question":"1. British real wages have fallen over the last year because the rate of growth in earnings has fallen behind the growth in labour productivity.","ID":"589","explanation":"","answers":[{"ID":"3403","answer":"False","correct":"1"},{"ID":"3402","answer":"True","correct":"0"}]},{"question":"2. The US Federal Reserve"s quantitative easing program ends this month. Most commentators agree it has not provided much stimulus. This reason for the lack of stimulus is because aggregate demand has not shown a sensitivity to interest rate reductions.n","ID":"590","explanation":"","answers":[{"ID":"3405","answer":"False","correct":"0"},{"ID":"3404","answer":"True","correct":"1"}]},{"question":"3. The Greek government has been accused of not pursuing its fiscal austerity program with sufficient commitment. The fact that the Greek government budget deficit continues to increase is evidence of this.","ID":"591","explanation":"","answers":[{"ID":"3399","answer":"False","correct":"1"},{"ID":"3398","answer":"True","correct":"0"}]},{"question":"4. The inflation risk under a fiat monetary system is no different to that which prevailed under a convertible currency system backed by gold with fixed exchange rates.","ID":"592","explanation":"","answers":[{"ID":"3393","answer":"False","correct":"0"},{"ID":"3392","answer":"True","correct":"1"}]},{"question":"5. Premium question: In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The government"s budget balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 3 per cent. In Year 2, the government stimulates the economy and pushes the primary budget deficit out to 2 per cent of GDP and in doing so stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio will rise but by an amount less than the rise in the budget deficit because of the real growth in the economy.","ID":"593","explanation":"","answers":[{"ID":"3390","answer":"False","correct":"0"},{"ID":"3389","answer":"True","correct":"0"},{"ID":"3391","answer":"Impossible to determine from the facts","correct":"1"}]}]}, {"ID":"118","name":"Quiz 2011 25","added_on":"2011-06-24 17:35:28","questions":[{"question":"1. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would find:","ID":"594","explanation":"","answers":[{"ID":"3416","answer":"A budget deficit","correct":"1"},{"ID":"3417","answer":"A budget surplus","correct":"0"},{"ID":"3418","answer":"Cannot determine because we would need to know the scale of the private domestic sector saving as a % of GDP.","correct":"0"}]},{"question":"2. Public bonds constitute private wealth. Accordingly, private net worth rises if the government issues bonds to match its deficit spending.","ID":"595","explanation":"","answers":[{"ID":"3420","answer":"False","correct":"1"},{"ID":"3419","answer":"True","correct":"0"}]},{"question":"3. A central bank would not be able to directly purchase Treasury debt to facilitate a national government"s budget deficit while still targeting a non-zero policy rate.","ID":"596","explanation":"","answers":[{"ID":"3422","answer":"False","correct":"1"},{"ID":"3421","answer":"True","correct":"0"}]},{"question":"4. While budget deficits rise due to the operation of the automatic stabilisers, as growth resumes, the automatic stabilisers work in a counter-cyclical fashion to ensure that the government budget balance returns to its appropriate level.","ID":"597","explanation":"","answers":[{"ID":"3424","answer":"False","correct":"1"},{"ID":"3423","answer":"True","correct":"0"}]},{"question":"5: Premium Question: A government wanting to reduce their unemployment rates after a deep recession should use expansionary fiscal policy to ensure real GDP growth gets back on trend.","ID":"598","explanation":"","answers":[{"ID":"3426","answer":"False","correct":"1"},{"ID":"3425","answer":"True","correct":"0"}]}]}, {"ID":"119","name":"Quiz 2011 26","added_on":"2011-07-01 11:00:41","questions":[{"question":"1. If the current account (on balance of payments) is in deficit and household saving increases as a proportion of disposable income then the government could still run a surplus without a decline in output and income occurring.","ID":"599","explanation":"","answers":[{"ID":"3438","answer":"False","correct":"0"},{"ID":"3437","answer":"True","correct":"1"}]},{"question":"2. Quantitative easing tries to stimulate economic activity by reducing long-term investment rates whereas deficit spending adds to aggregate demand via tax cuts or direct public spending. Both expansionary efforts involve an increase in the net financial assets held by the non-government sector.","ID":"600","explanation":"","answers":[{"ID":"3440","answer":"False","correct":"1"},{"ID":"3439","answer":"True","correct":"0"}]},{"question":"3. Politics aside, the US central bank could still increase interest rates even if the US government instructed it to directly purchase treasury debt to facilitate the national governments budget deficit.","ID":"601","explanation":"","answers":[{"ID":"3442","answer":"False","correct":"0"},{"ID":"3441","answer":"True","correct":"1"}]},{"question":"4. A continuous budget deficit leads to public spending building up and an increase in the inflation risk faced by the economy.","ID":"602","explanation":"","answers":[{"ID":"3444","answer":"False","correct":"1"},{"ID":"3443","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Domestic deflation (reducing domestic wages and prices relative to other nations), which some Eurozone nations are pursuing because they effectively face a fixed exchange rate, may not increase export competitiveness.","ID":"603","explanation":"","answers":[{"ID":"3446","answer":"False","correct":"0"},{"ID":"3445","answer":"True","correct":"1"}]}]}, {"ID":"120","name":"Quiz 2011 27","added_on":"2011-07-08 12:20:06","questions":[{"question":"1. A hallmark of the neo-liberal period has been the declining share of wages in national income which in part meant that economic growth became more dependent on credit to maintain growth in consumption spending. Increasing the wage share will require a faster rate of growth in real wages in the coming years.","ID":"604","explanation":"","answers":[{"ID":"3458","answer":"False","correct":"1"},{"ID":"3457","answer":"True","correct":"0"}]},{"question":"2. National accounting shows us that a government surplus equals a non-government deficit. If fiscal austerity does generate budget surpluses it does so by swapping public for private debt.","ID":"605","explanation":"","answers":[{"ID":"3470","answer":"False","correct":"1"},{"ID":"3469","answer":"True","correct":"0"}]},{"question":"3. In a stock-flow consistent macroeconomics, the sectoral balance stocks all sum to zero.","ID":"606","explanation":"","answers":[{"ID":"3462","answer":"False","correct":"1"},{"ID":"3461","answer":"True","correct":"0"}]},{"question":"4. Public spending can \\\"crowd out\\\" private spending.","ID":"607","explanation":"","answers":[{"ID":"3466","answer":"False","correct":"0"},{"ID":"3465","answer":"True","correct":"1"}]},{"question":"5. Premium question: The payment of a positive interest return by the central bank on overnight bank reserves eliminates the need for it to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements). ","ID":"608","explanation":"","answers":[{"ID":"3468","answer":"False","correct":"1"},{"ID":"3467","answer":"True","correct":"0"}]}]}, {"ID":"121","name":"Quiz 2011 28","added_on":"2011-07-15 12:15:26","questions":[{"question":"1. A rising household saving ratio combined with an external deficit that is draining aggregate demand, doesn"t necessarily mean that the budget deficit has to rise to maintain current output growth.n","ID":"609","explanation":"","answers":[{"ID":"3482","answer":"False","correct":"0"},{"ID":"3481","answer":"True","correct":"1"}]},{"question":"2. Assume that total employment grew in a particular month in net terms yet unemployment still rose. You also know that the labour force participation rate fell marginally. Taken together this information tells you that:","ID":"610","explanation":"","answers":[{"ID":"3483","answer":"Labour force growth outstripped employment growth but was less than the growth in the working age population.","correct":"1"},{"ID":"3484","answer":"The working age population grew faster than employment and offset the decline in the labour force arising from the drop in the participation rate.","correct":"0"},{"ID":"3485","answer":"The labour force grew faster than employment but you cannot tell what happened to the working age population from the information provided.","correct":"0"}]},{"question":"3. If the European Monetary Union (Eurozone) relaxed the budget restrictions on national governments that are applicable under the Stability and Growth Pact (3 per cent deficit to GDP ratios and 60 per cent public debt to GDP ratios) then the current solvency risk facing several EMU members would be resolved.","ID":"611","explanation":"","answers":[{"ID":"3487","answer":"False","correct":"1"},{"ID":"3486","answer":"True","correct":"0"}]},{"question":"4. The Greek crisis could significantly ease its current crisis if it improved its capacity to tax its higher income earning groups.","ID":"612","explanation":"","answers":[{"ID":"3489","answer":"False","correct":"0"},{"ID":"3488","answer":"True","correct":"1"}]},{"question":"5. Premium question: Mainstream economists have argued that the large scale quantitative easing conducted by central banks in recent years - so-called printing money - would be inflationary. They base their predictions on the Quantity Theory of Money which links the growth of the money stock to the inflation rate (too much money chasing too few goods). The fact that inflation has not accelerated sharply indicates that this mainstream economic theory should be discarded.n","ID":"613","explanation":"","answers":[{"ID":"3493","answer":"False","correct":"1"},{"ID":"3492","answer":"True","correct":"0"}]}]}, {"ID":"122","name":"Quiz 2011 29","added_on":"2011-07-22 08:20:19","questions":[{"question":"1. Irrespective of what the government does, the private domestic sector can save overall, as long as the net exports are positive.","ID":"614","explanation":"","answers":[{"ID":"3505","answer":"False","correct":"1"},{"ID":"3504","answer":"True","correct":"0"}]},{"question":"2. The payment to the private banks on reserves they hold with the central bank reduces their incentive to advance credit to the private sector.n","ID":"615","explanation":"","answers":[{"ID":"3511","answer":"False","correct":"1"},{"ID":"3510","answer":"True","correct":"0"}]},{"question":"3. An indicator of the impact the recession has had on credit creation is the fact that the growth of bank reserves and the growth in the stock of money have not followed a similar path in recent years. (NOTE: the inclusion of the word not before followed - July 27, 2011 - to reflect valid comments from readers. Original wording was an oversight).","ID":"616","explanation":"","answers":[{"ID":"3517","answer":"False","correct":"0"},{"ID":"3516","answer":"True","correct":"1"}]},{"question":"4. Rising government net spending (budget deficit) indicates that the government fiscal stance is becoming more expansionary.","ID":"617","explanation":"","answers":[{"ID":"3515","answer":"False","correct":"1"},{"ID":"3514","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Greece will only start to reduce its public debt ratio when the government can run primary budget surpluses.","ID":"618","explanation":"","answers":[{"ID":"3509","answer":"False","correct":"1"},{"ID":"3508","answer":"True","correct":"0"}]}]}, {"ID":"123","name":"Quiz 2011 30","added_on":"2011-07-29 12:34:08","questions":[{"question":"1. For the US private sector to reduce its overall overall debt levels, the government must run a deficit.","ID":"619","explanation":"","answers":[{"ID":"3529","answer":"False","correct":"0"},{"ID":"3528","answer":"True","correct":"1"}]},{"question":"2. Larger fiscal deficits as a percentage of GDP reduce the local productive resources that are available to the private sector.","ID":"620","explanation":"","answers":[{"ID":"3531","answer":"False","correct":"0"},{"ID":"3530","answer":"True","correct":"1"}]},{"question":"3. A national government that issues its own currency and freely floats it on foreign markets never faces a risk of insolvency.","ID":"621","explanation":"","answers":[{"ID":"3533","answer":"False","correct":"1"},{"ID":"3532","answer":"True","correct":"0"}]},{"question":"4. The US Federal Reserve could easily directly purchase Treasury debt to facilitate the US Governments budget deficit without compromising its monetary policy settings because its short-term policy rate is already near zero.nn","ID":"622","explanation":"","answers":[{"ID":"3541","answer":"False","correct":"1"},{"ID":"3540","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Assume the government increases spending by $100 billion from now and maintains that injection for three years. Economists estimate the spending multiplier to be 1.6 and the impact is immediate and exhausted in each year. They also estimate that the import propensity is 0.2 (meaning that imports rise by 20 cents for every dollar generated in the economy) and the current tax rate is equal to 20 per cent. They also estimate that the tax multiplier (impact of tax changes on income) to be equal to 1. Which of the following statements is correct?nnnnn","ID":"623","explanation":"","answers":[{"ID":"3536","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $480 billion and the private sector saves 24 cents out of every extra disposable dollar generated.","correct":"0"},{"ID":"3537","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $480 billion and the private sector saves 28 cents out of every extra dollar disposable generated.","correct":"1"},{"ID":"3538","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $384 billion and the private sector saves 24 cents out of every extra dollar disposable generated.","correct":"0"},{"ID":"3539","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $384 billion and the private sector saves 28 cents out of every extra dollar disposable generated.","correct":"0"}]}]}, {"ID":"124","name":"Quiz 2011 31","added_on":"2011-08-05 10:48:47","questions":[{"question":"1. With fiscal austerity now in vogue, Modern Monetary Theory (MMT) would not dispute the argument that workers might endanger their employment prospects by demanding real wages growth at present.","ID":"624","explanation":"","answers":[{"ID":"3555","answer":"False","correct":"0"},{"ID":"3554","answer":"True","correct":"1"}]},{"question":"2. A Eurozone nation like Greece that runs a persistent current account deficit cannot sustain rising living standards over time given that the ECB chooses to maintain rigid control of the inflation rate.","ID":"625","explanation":"","answers":[{"ID":"3557","answer":"False","correct":"1"},{"ID":"3556","answer":"True","correct":"0"}]},{"question":"3. The Balanced Budget amendment being proposed in the US where the federal government would have to match revenue and spending in each fiscal year ensures that discretionary government spending will always be pro-cyclical.","ID":"626","explanation":"","answers":[{"ID":"3559","answer":"False","correct":"0"},{"ID":"3558","answer":"True","correct":"1"}]},{"question":"4. A balanced budget amendment in the US would ensure that the private sector debt levels would rise in the current circumstances.","ID":"627","explanation":"","answers":[{"ID":"3561","answer":"False","correct":"0"},{"ID":"3560","answer":"True","correct":"1"}]},{"question":"5. Premium Question: In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 1 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The government"s budget balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 3 per cent.nnIn Year 2, the government stimulates the economy and pushes the primary budget deficit out to 2 per cent of GDP and in doing so stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio will fall because of the real growth in the economy.","ID":"628","explanation":"","answers":[{"ID":"3563","answer":"False","correct":"0"},{"ID":"3562","answer":"True","correct":"1"}]}]}, {"ID":"125","name":"Quiz 2011 32","added_on":"2011-08-12 09:47:43","questions":[{"question":"1. In the recent British riots, a common claim has been that the rioters were unemployed youth on income support benefits who were living off the hard work of those who pay taxes. This claim has validity.","ID":"629","explanation":"","answers":[{"ID":"3575","answer":"False","correct":"0"},{"ID":"3574","answer":"True","correct":"1"}]},{"question":"2. The automatic stabilisers operate in a counter-cyclical fashion and ensure that the government budget balance, which rises during a recession, returns to its appropriate level once growth resumes.","ID":"630","explanation":"","answers":[{"ID":"3581","answer":"False","correct":"1"},{"ID":"3580","answer":"True","correct":"0"}]},{"question":"3. A potential problem with running continuous budget deficits is that the spending builds up over time which adds to inflationary pressures.","ID":"631","explanation":"","answers":[{"ID":"3583","answer":"False","correct":"1"},{"ID":"3582","answer":"True","correct":"0"}]},{"question":"4. In recent days we have observed falling government bond yields in most non-EMU nations which suggests that investors are viewing sovereign debt less favourably since the downgrading of the US rating.","ID":"632","explanation":"","answers":[{"ID":"3587","answer":"False","correct":"1"},{"ID":"3586","answer":"True","correct":"0"}]},{"question":"5. Premium Question: If private domestic investment is less than private domestic saving and the current account is draining aggregate demand then the government budget has to be in deficit no matter what level of GDP is produced.","ID":"633","explanation":"","answers":[{"ID":"3589","answer":"False","correct":"0"},{"ID":"3588","answer":"True","correct":"1"}]}]}, {"ID":"126","name":"Quiz 2011 33","added_on":"2011-08-19 12:06:29","questions":[{"question":"1. Issuing government debt reduces the risk of inflation arising from deficit spending because the private sector has less money to spend.","ID":"634","explanation":"","answers":[{"ID":"3601","answer":"False","correct":"1"},{"ID":"3600","answer":"True","correct":"0"}]},{"question":"2. When the government matches it deficit with new debt issues the non-government sector wealth rises.","ID":"635","explanation":"","answers":[{"ID":"3603","answer":"False","correct":"0"},{"ID":"3602","answer":"True","correct":"1"}]},{"question":"3. If net exports are running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must be running a surplus equal to 1 per cent of GDP.","ID":"636","explanation":"","answers":[{"ID":"3605","answer":"False","correct":"1"},{"ID":"3604","answer":"True","correct":"0"}]},{"question":"4. Choose the correct response (all balances expressed as a per cent of GDP):n
n(a) A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.n
n(b) A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.n
n(c) A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.n
n(d) None of the above are possible as they all defy the sectoral balances accounting identity.nn","ID":"637","explanation":"","answers":[{"ID":"3621","answer":"Option (d)","correct":"0"},{"ID":"3620","answer":"Option (c)","correct":"0"},{"ID":"3619","answer":"Option (b)","correct":"1"},{"ID":"3618","answer":"Option (a)","correct":"0"}]},{"question":"5. Premium question: To reduce the public debt ratio, the government has to eventually run primary budget surpluses (that is, spend less than they raise in taxes).","ID":"638","explanation":"","answers":[{"ID":"3623","answer":"False","correct":"1"},{"ID":"3622","answer":"True","correct":"0"}]}]}, {"ID":"127","name":"Quiz 2011 34","added_on":"2011-08-26 11:30:36","questions":[{"question":"1. Which scenario represents a more expansionary outcome:n
n(a) A budget deficit equivalent to 5 per cent of GDP (including the impact of automatic stabilisers equivalent to 3 per cent of GDP).n
n(b) A budget deficit equivalent to 3 per cent of GDP.n
n(c) You cannot tell because you do not know the decomposition between the cyclical and structural components in Option (B)","ID":"639","explanation":"","answers":[{"ID":"3641","answer":"Option (c)","correct":"0"},{"ID":"3640","answer":"Option (b)","correct":"0"},{"ID":"3639","answer":"Option (a)","correct":"1"}]},{"question":"2. When the government matches an increase in deficit spending with debt issued to the private sector, the growth in aggregate demand is less than would be the case if the government didn"t borrow.","ID":"640","explanation":"","answers":[{"ID":"3643","answer":"False","correct":"1"},{"ID":"3642","answer":"True","correct":"0"}]},{"question":"3. Fiscal austerity (manifesting as a budget surplus) will not to damage economic growth if the external balance is in surplus.","ID":"641","explanation":"","answers":[{"ID":"3651","answer":"False","correct":"1"},{"ID":"3650","answer":"True","correct":"0"}]},{"question":"4. If the central bank regulated that banks have to hold reserve equivalent to their outstanding loans this would restrict lending.","ID":"642","explanation":"","answers":[{"ID":"3647","answer":"False","correct":"1"},{"ID":"3646","answer":"True","correct":"0"}]},{"question":"5. Premium Question: In the context of population ageing, the fact that a sovereign government is never financially constrained means that it can always provide first-class health care to its citizens.","ID":"643","explanation":"","answers":[{"ID":"3649","answer":"False","correct":"1"},{"ID":"3648","answer":"True","correct":"0"}]}]}, {"ID":"128","name":"Quiz 2011 35","added_on":"2011-09-02 11:27:32","questions":[{"question":"1. A central bank sets the short-run interest rate and can choose to pay any rate on excess reserves to the commercial banks that it chooses.","ID":"644","explanation":"","answers":[{"ID":"3663","answer":"False","correct":"1"},{"ID":"3662","answer":"True","correct":"0"}]},{"question":"2. The Australian dollar is currently appreciating strongly against many key currencies because the Asian growth phase is increasing demand for our mining exports. This has put pressure on our international competitiveness which is squeezing other export industries (such as manufacturing) which are not enjoying a commensurate growth in world demand. A cut in domestic wages and the rate of inflation would restore competitiveness in the industries that are under pressure.","ID":"645","explanation":"","answers":[{"ID":"3665","answer":"False","correct":"1"},{"ID":"3664","answer":"True","correct":"0"}]},{"question":"3. If the nation is running a current account deficit of 2 per cent of GDP and the government runs a surplus equal to 2 per cent of GDP, then we know that at the current level of GDP, the private domestic sector is spending more than they are earning.","ID":"646","explanation":"","answers":[{"ID":"3673","answer":"False","correct":"0"},{"ID":"3672","answer":"True","correct":"1"}]},{"question":"4. In a stock-flow consistent macroeconomics, we know that flows during a period add to relevant stocks. Accordingly, if the flow of government spending rose by $100 billion in total, then if nothing else changes the stock of aggregate demand would also rise by $100 billion in the first instance (before the multiplier starts to work).","ID":"647","explanation":"","answers":[{"ID":"3669","answer":"False","correct":"1"},{"ID":"3668","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Modern Monetary Theory (MMT) demonstrates that mass unemployment arises from deficient aggregate demand which calls for an increase in the budget deficit to correct the deficiency. This observation is totally at odds with the mainstream view that unemployment can be reduced by cutting real wages relative to productivity.","ID":"648","explanation":"","answers":[{"ID":"3671","answer":"False","correct":"1"},{"ID":"3670","answer":"True","correct":"0"}]}]}, {"ID":"129","name":"Quiz 2011 36","added_on":"2011-09-09 07:51:18","questions":[{"question":"1. When a sovereign government issues debt the overall holdings of financial assets held by the non-government sector $-for-$ does not change.","ID":"649","explanation":"","answers":[{"ID":"3685","answer":"False","correct":"0"},{"ID":"3684","answer":"True","correct":"1"}]},{"question":"2. Ignoring any reserve requirements that might be imposed, if the central bank pays a positive interest rate on overnight reserves held by the commercial banks then it may still have to conduct open market operations as a means of ensuring that levels of bank reserves are consistent with its policy target rate of interest.","ID":"650","explanation":"","answers":[{"ID":"3687","answer":"False","correct":"0"},{"ID":"3686","answer":"True","correct":"1"}]},{"question":"3. If participation rates are constant, percentage unemployment will not change as long as employment growth matches the pace of growth in the working age population (people above 15 years of age).","ID":"651","explanation":"","answers":[{"ID":"3689","answer":"False","correct":"0"},{"ID":"3688","answer":"True","correct":"1"}]},{"question":"4. National government taxation creates unemployment, other things equal.","ID":"652","explanation":"","answers":[{"ID":"3695","answer":"False","correct":"0"},{"ID":"3694","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Mainstream monetary theory highlights the concept of a money multiplier which says that the money supply is some multiple of the monetary base (bank reserves and currency). There is a direct relationship between the monetary base and the the money supply in a modern monetary economy.","ID":"653","explanation":"","answers":[{"ID":"3693","answer":"False","correct":"0"},{"ID":"3692","answer":"True","correct":"1"}]}]}, {"ID":"130","name":"Quiz 2011 37","added_on":"2011-09-16 17:56:48","questions":[{"question":"1. If the inflation rate is steady and the central bank maintains a constant nominal interest rate, then the public debt ratio will rise if the government deficit doubles (say, from 2 to 4 per cent of GDP) although Modern Monetary Theory would not place any special importance in that increase.","ID":"654","explanation":"","answers":[{"ID":"3707","answer":"False","correct":"1"},{"ID":"3706","answer":"True","correct":"0"}]},{"question":"2. The wage share in national income in many nations has fallen over the neo-liberal period which means that workers" real living standards are being eroded in those countries.","ID":"655","explanation":"","answers":[{"ID":"3709","answer":"False","correct":"1"},{"ID":"3708","answer":"True","correct":"0"}]},{"question":"3. Real wages will rise if the rate of growth in earnings is faster than the growth in labour productivity.","ID":"656","explanation":"","answers":[{"ID":"3715","answer":"False","correct":"1"},{"ID":"3714","answer":"True","correct":"0"}]},{"question":"4. A budget surplus indicates that the national government is trying to slow the economy down and contain inflation.","ID":"657","explanation":"","answers":[{"ID":"3717","answer":"False","correct":"1"},{"ID":"3716","answer":"True ","correct":"0"}]},{"question":"5. Premium Question: The EU/IMF/ECB strategy for Greece is twofold: (a) cutting real wages to improve external competitiveness; and (b) pushing the government back into surplus. The aim is to reduce the budget deficit without compromising real economic growth. It is hoped that an increase in net exports will replace the loss of spending from fiscal austerity. Suppose that the government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. In that situation we would conclude that the fiscal austerity plans would not undermine growth if the net export projection was realised.","ID":"658","explanation":"","answers":[{"ID":"3719","answer":"False","correct":"1"},{"ID":"3718","answer":"True","correct":"0"}]}]}, {"ID":"131","name":"Quiz 2011 38","added_on":"2011-09-23 09:14:04","questions":[{"question":"1. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. If the private domestic sector successfully spends less than its income, then we would always find a public sector deficit.","ID":"659","explanation":"","answers":[{"ID":"3731","answer":"False","correct":"0"},{"ID":"3730","answer":"True","correct":"1"}]},{"question":"2. If economy-wide average nominal wages grow more slowly than the inflation rate then real income is being redistributed to profits.","ID":"660","explanation":"","answers":[{"ID":"3735","answer":"False","correct":"1"},{"ID":"3734","answer":"True","correct":"0"}]},{"question":"3. The automatic stabilisers operate to return the government budget balance returns to its appropriate level once growth returns following a downturn.","ID":"661","explanation":"","answers":[{"ID":"3737","answer":"False","correct":"1"},{"ID":"3736","answer":"True","correct":"0"}]},{"question":"4. The government has to issue debt if the central bank is targetting a non-zero policy rate and is reluctant to pay a return on excess bank reserves.","ID":"662","explanation":"","answers":[{"ID":"3739","answer":"False","correct":"0"},{"ID":"3738","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Assume that inflation and nominal interest rates are both constant and zero and a country has a public debt to GDP ratio of 100 per cent. The approach taken by those who support fiscal austerity is to run primary budget surpluses to stabilise and then reduce the debt ratio. Under the circumstances given, this strategy can still work if the economy contracts under the burden of the surpluses.","ID":"663","explanation":"","answers":[{"ID":"3743","answer":"False","correct":"0"},{"ID":"3742","answer":"True","correct":"1"}]}]}, {"ID":"132","name":"Quiz 2011 39","added_on":"2011-09-28 10:13:20","questions":[{"question":"1. If a nation"s external sector is in balance (and thus making no contribution to real GDP growth) then the private domestic sector will not be able to spend more than it earns (at the current income level) if the government runs a balanced budget.","ID":"664","explanation":"","answers":[{"ID":"3759","answer":"False","correct":"0"},{"ID":"3758","answer":"True","correct":"1"}]},{"question":"2. In terms of the initial impact on national income, a tax increase which aims to increase tax revenue at the current level of national income by $x is less damaging than a spending cut of $x?","ID":"665","explanation":"","answers":[{"ID":"3765","answer":"False","correct":"0"},{"ID":"3764","answer":"True","correct":"1"}]},{"question":"3. During a recession, a government should use expansionary fiscal policy to restore trend real GDP growth if it wants to reduce unemployment.n","ID":"666","explanation":"","answers":[{"ID":"3767","answer":"False","correct":"1"},{"ID":"3766","answer":"True","correct":"0"}]},{"question":"4. In many nations, private households are increasing their saving ratios (from disposable income) and firms are declining to invest. To avoid employment losses, these developments signal the need for expanding public deficits.","ID":"667","explanation":"","answers":[{"ID":"3757","answer":"False","correct":"1"},{"ID":"3756","answer":"True","correct":"0"}]},{"question":"5. Premium Question: If the external sector is accumulating financial claims on the local economy and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can run surpluses without damaging employment growth.","ID":"668","explanation":"","answers":[{"ID":"3763","answer":"False","correct":"1"},{"ID":"3762","answer":"True","correct":"0"}]}]}, {"ID":"133","name":"Quiz 2011 40","added_on":"2011-10-07 09:19:49","questions":[{"question":"1. Some \\\"Occupy Wall Street\\\" protesters are demanding that bank lending should be more closely regulated to ensure that all bank loans were backed by reserves held at the bank. However, this would unnecessarily reduce the capacity of the banks to lend.n","ID":"669","explanation":"","answers":[{"ID":"3781","answer":"False","correct":"1"},{"ID":"3780","answer":"True","correct":"0"}]},{"question":"2. Taxation creates unemployment.","ID":"670","explanation":"","answers":[{"ID":"3783","answer":"False","correct":"0"},{"ID":"3782","answer":"True","correct":"1"}]},{"question":"3. Assume a nation is running an external surplus equivalent to 2 per cent of GDP and the private domestic sector is currently saving overall 1 per cent of GDP. In this situation, the government must be running:","ID":"671","explanation":"","answers":[{"ID":"3784","answer":"A budget deficit equal to 1 per cent of GDP.","correct":"0"},{"ID":"3785","answer":"A budget surplus equal to 1 per cent of GDP.","correct":"1"},{"ID":"3786","answer":"A budget deficit equal to 3 per cent of GDP.","correct":"0"},{"ID":"3787","answer":"A budget surplus equal to 3 per cent of GDP.","correct":"0"}]},{"question":"4. Start from a situation where the external surplus is the equivalent of 2 per cent of GDP and the budget surplus is 2 per cent. If the budget balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then:","ID":"672","explanation":"","answers":[{"ID":"3794","answer":"National income rises and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"3795","answer":"National income remains unchanged and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"3796","answer":"National income falls and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"3797","answer":"National income rises and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"1"},{"ID":"3798","answer":"National income remains unchanged and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP","correct":"0"},{"ID":"3799","answer":" National income falls and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"}]},{"question":"5. Premium Question: Assume a nation"s public debt to GDP ratio rises to 100 per cent. The central bank keeps its nominal interest rate at zero and a zero inflation rate persists. Under these circumstances fiscal austerity packages that create recession can still reduce the public debt to GDP ratio, as long as the primary surplus to GDP ratio is greater than the negative GDP growth rate.","ID":"673","explanation":"","answers":[{"ID":"3793","answer":"False","correct":"0"},{"ID":"3792","answer":"True","correct":"1"}]}]}, {"ID":"134","name":"Quiz 2011 41","added_on":"2011-10-14 12:18:26","questions":[{"question":"1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, we cannot tell what the government budget balance will be as a percentage of GDP until we know the relative magnitudes of the other two balances.","ID":"674","explanation":"","answers":[{"ID":"3811","answer":"False","correct":"1"},{"ID":"3810","answer":"True","correct":"0"}]},{"question":"2. The private sector is wealthier if the government matches its deficit spending with bond issues relative to if the government just spent without issuing bonds (that is, instructed the central bank to credit bank accounts).","ID":"675","explanation":"","answers":[{"ID":"3813","answer":"False","correct":"1"},{"ID":"3812","answer":"True","correct":"0"}]},{"question":"3. Modern Monetary Theory (MMT) explains how central banks sell bonds to drain excess bank reserves in order to maintain their given interest rate setting. We know that the same outcome can be achieved by paying interest to the commercial banks on the same reserves. Ignoring any reserve requirements, this means that there is no need for government (via the central bank) to issue debt when it net spends.","ID":"676","explanation":"","answers":[{"ID":"3815","answer":"False","correct":"1"},{"ID":"3814","answer":"True","correct":"0"}]},{"question":"4. Continuous budget deficits increase the stock of public spending which might increase the inflation risk if spending exceeds the real capacity of the economy to increase output.","ID":"677","explanation":"","answers":[{"ID":"3817","answer":"False","correct":"1"},{"ID":"3816","answer":"True","correct":"0"}]},{"question":"5. Premium Question: To reduce trade deficits, Eurozone nations are seeking to restore export competitiveness (within the Eurozone) by domestic deflation (reducing domestic wages and prices relative to other nations) given they do not have a flexible exchange rate. However, export competitiveness may still fall no matter how much some nations deflate.","ID":"678","explanation":"","answers":[{"ID":"3819","answer":"False","correct":"0"},{"ID":"3818","answer":"True","correct":"1"}]}]}, {"ID":"135","name":"Quiz 2011 42","added_on":"2011-10-20 18:13:11","questions":[{"question":"1. A sovereign national government has to tax in order to spend","ID":"679","explanation":"","answers":[{"ID":"3831","answer":"False","correct":"0"},{"ID":"3830","answer":"True","correct":"1"}]},{"question":"2. A budget surplus indicates that the national government is seeking to slow down aggregate demand.","ID":"680","explanation":"","answers":[{"ID":"3833","answer":"False","correct":"1"},{"ID":"3832","answer":"True","correct":"0"}]},{"question":"3. When the external sector is contributing to growth, the government can safely pursue a surplus even if private domestic sector desires to spend less than they earn.","ID":"681","explanation":"","answers":[{"ID":"3837","answer":"False","correct":"1"},{"ID":"3836","answer":"True","correct":"0"}]},{"question":"4. To redistribute national income back to workers, nominal wages have to grow faster than inflation.","ID":"682","explanation":"","answers":[{"ID":"3839","answer":"False","correct":"1"},{"ID":"3838","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Assume that a nation"s real GDP growth rate over the next year is 3 per cent and labour productivity grows at 1.5 per cent over the same period. If the the labour force maintains a growth rate of 1.5 per cent per annum and the average working week is constant in hours, then:","ID":"683","explanation":"","answers":[{"ID":"3840","answer":"The unemployment rate will rise in the coming year by 1.5 per cent.","correct":"0"},{"ID":"3841","answer":"The unemployment rate will fall in the coming year by 1.5 per cent.","correct":"0"},{"ID":"3842","answer":"The unemployment rate will be unchanged.","correct":"1"}]}]}, {"ID":"136","name":"Quiz 2011 43","added_on":"2011-10-28 06:03:05","questions":[{"question":"1. Economists use two multipliers to estimate the impact on GDP of an expansion in government spending associated with rising tax rates. The spending multiplier indicates the extent to which GDP rises as a result of the extra aggregate demand arising from the increased government spending. The tax multiplier indicates the impact of rising tax rates on GDP as labour supply is reduced because of the disincentives associated with taxation. The net effect on GDP is the sum of these two impacts.","ID":"684","explanation":"","answers":[{"ID":"3854","answer":"False","correct":"1"},{"ID":"3853","answer":"True","correct":"0"}]},{"question":"2. Assume that the government increases spending by $100 billion at the start of each year and maintains this policy for the next three years from now. Economists estimate the spending multiplier to be 1.5 and the impact is exhausted within each year (all induced consumption is completed within 12 months). The tax multiplier is estimated to be equal to 1 and the current tax rate is equal to 30 per cent (so tax revenue rises by 30 cents for every extra dollar of GDP produced ). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"685","explanation":"","answers":[{"ID":"3855","answer":"$135 billionn","correct":"0"},{"ID":"3856","answer":"$150 billion","correct":"0"},{"ID":"3857","answer":"$315 billion","correct":"0"},{"ID":"3858","answer":"$450 billion","correct":"1"}]},{"question":"3. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory (MMT) tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"686","explanation":"","answers":[{"ID":"3860","answer":"False","correct":"1"},{"ID":"3859","answer":"True","correct":"0"}]},{"question":"4. The US economy is projected to grow in real terms by around 1.5 per cent in 2011. At present the Conference Board expects real GDP per employed person to grow by 1.1 per cent over the same period and there is also the expectation that average weekly hours worked will remain more or less constant in 2011. Which of the following labour force growth rates would provide the basis for an expectation that the unemployment rate will be lower at the end of 2011 than at the beginning?","ID":"687","explanation":"","answers":[{"ID":"3861","answer":"0.5 per cent","correct":"0"},{"ID":"3862","answer":"2.6 per cent","correct":"0"},{"ID":"3863","answer":"0.3 per cent","correct":"1"},{"ID":"3864","answer":"Cannot tell because we don"t know what the participation rate is likely to be.","correct":"0"}]},{"question":"5. Premium question: EMU member nations face solvency risk because they do not issue their own currency. This source of risk would be eliminated if these nations exited the Eurozone and re-established their currency sovereignty - that is, issued their own floating currency.","ID":"688","explanation":"","answers":[{"ID":"3866","answer":"False","correct":"1"},{"ID":"3865","answer":"True","correct":"0"}]}]}, {"ID":"137","name":"Quiz 2011 44","added_on":"2011-11-04 07:08:20","questions":[{"question":"1. If the government increases its budget deficit as a percentage of GDP it will squeeze the real resources available for private productive uses.","ID":"689","explanation":"","answers":[{"ID":"3880","answer":"False","correct":"0"},{"ID":"3879","answer":"True","correct":"1"}]},{"question":"2. For a nation running a current account deficit, national income adjustments will ensure government budget is in deficit no matter what the government"s intentions are if the private domestic sector is spending less than its income.","ID":"690","explanation":"","answers":[{"ID":"3878","answer":"False","correct":"0"},{"ID":"3877","answer":"True","correct":"1"}]},{"question":"3. Central banks manipulate bank reserves to control its policy interest rate.","ID":"691","explanation":"","answers":[{"ID":"3882","answer":"False","correct":"0"},{"ID":"3881","answer":"True","correct":"1"}]},{"question":"4. If the central bank chooses to pay a return on overnight reserves held by the commercial banks equal to the current policy rate then the overall level of reserves held by the latter will be higher than otherwise (ignore any reserve requirements).","ID":"692","explanation":"","answers":[{"ID":"3886","answer":"False","correct":"0"},{"ID":"3885","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Specific legal considerations aside, it would be impossible for a government to avoid issuing debt to the private sector when running a budget deficit while the central bank was targeting a positive short-term policy rate.","ID":"693","explanation":"","answers":[{"ID":"3888","answer":"False","correct":"1"},{"ID":"3887","answer":"True","correct":"0"}]}]}, {"ID":"138","name":"Quiz 2011 45","added_on":"2011-11-11 06:35:36","questions":[{"question":"1. At present Greece (and all the EMU member nations) face insolvency risk. If Greece left the Eurozone and re-established its own currency, converted all euro liabilities to their own currency, they would eliminate that risk on all future liabilities.","ID":"694","explanation":"","answers":[{"ID":"3900","answer":"False","correct":"1"},{"ID":"3899","answer":"True","correct":"0"}]},{"question":"2. When a nation is enjoying a strong terms of trade with an external surplus, the government can create more space for non-inflationary spending in the future by running budget surpluses and accumulating them in a sovereign fund.","ID":"695","explanation":"","answers":[{"ID":"3902","answer":"False","correct":"1"},{"ID":"3901","answer":"True","correct":"0"}]},{"question":"3. OECD estimates of structural budget deficits will usually lead one to conclude that a government"s discretionary fiscal position is less expansionary than it actually is.n","ID":"696","explanation":"","answers":[{"ID":"3904","answer":"False","correct":"1"},{"ID":"3903","answer":"True","correct":"0"}]},{"question":"4. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP). A nation can run a current account deficit accompanied by a government sector surplus:","ID":"697","explanation":"","answers":[{"ID":"3907","answer":"of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"3908","answer":"of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"3909","answer":"that is a larger proportion of GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"3910","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.n","correct":"0"}]},{"question":"5. Premium Question: Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP minus the changes in the monetary base arising from official foreign exchange transactions. ","ID":"698","explanation":"","answers":[{"ID":"3906","answer":"False","correct":"1"},{"ID":"3905","answer":"True","correct":"0"}]}]}, {"ID":"139","name":"Quiz 2011 46","added_on":"2011-11-15 10:01:06","questions":[{"question":"1. The automatic stabilisers are supporting growth in Europe.","ID":"699","explanation":"","answers":[{"ID":"3922","answer":"False","correct":"0"},{"ID":"3921","answer":"True","correct":"1"}]},{"question":"2. Continuous budget deficits are more likely to present an inflation risk than one-off deficits designed to meet a short-term private spending decline.n","ID":"700","explanation":"","answers":[{"ID":"3924","answer":"False","correct":"1"},{"ID":"3923","answer":"True","correct":"0"}]},{"question":"3. The current strategy for the Eurozone is for member states to undertake a painful internal devaluation to restore growth and the austerity programs are designed to deflate nominal wages and prices to facilitate that adjustment. The aim is for Greece, for example, to reduce its real unit labour costs faster than their trading partners can. For the logic to follow then if wages and prices fall at the same rate, labour productivity has to rise and employment has to fall.","ID":"701","explanation":"","answers":[{"ID":"3926","answer":"False","correct":"1"},{"ID":"3925","answer":"True ","correct":"0"}]},{"question":"4. A nation can run a current account deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit) while the private domestic sector is spending more than they are earning.","ID":"702","explanation":"","answers":[{"ID":"3928","answer":"False","correct":"0"},{"ID":"3927","answer":"True","correct":"1"}]},{"question":"5. Premium question: To maintain financial stability, the monetary base has to be driven by changes in the money supply just as the money multiplier in mainstream macroeconomics textbooks explains.","ID":"703","explanation":"","answers":[{"ID":"3930","answer":"False","correct":"1"},{"ID":"3929","answer":"True","correct":"0"}]}]}, {"ID":"140","name":"Quiz 2011 47","added_on":"2011-11-25 11:21:23","questions":[{"question":"1. Assume that the current account deficit of a nation is on average over the business cycle equal to 2 per cent of GDP and that the government manages to run a balanced budget when averaged over the same cycle. We can conclude that on average the private domestic sector overall is spending more than it is earning.","ID":"704","explanation":"","answers":[{"ID":"3942","answer":"False","correct":"0"},{"ID":"3941","answer":"True","correct":"1"}]},{"question":"2. Trade unions can cause mass unemployment by forcing firms to accede to wage demands that outstrip the inflation rate.n","ID":"705","explanation":"","answers":[{"ID":"3944","answer":"False","correct":"0"},{"ID":"3943","answer":"True","correct":"1"}]},{"question":"3. Trade unions that manage to push aggregate wages growth ahead of the inflation rate will ensure that workers gain a greater share of national income.","ID":"706","explanation":"","answers":[{"ID":"3946","answer":"False","correct":"1"},{"ID":"3945","answer":"True","correct":"0"}]},{"question":"4. Sovereign government spending becomes more expensive when government bond yields for new issues rise.","ID":"707","explanation":"","answers":[{"ID":"3954","answer":"False","correct":"1"},{"ID":"3953","answer":"True","correct":"0"}]},{"question":"5. Premium Question: If labour productivity is growing at 2 per cent per annum and the labour force is growing at 1.5 per cent per annum and the average working week is constant in hours, then real GDP growth must be greater than 3.5 per cent per annum or unemployment will rise.","ID":"708","explanation":"","answers":[{"ID":"3950","answer":"False","correct":"1"},{"ID":"3949","answer":"True","correct":"0"}]}]}, {"ID":"141","name":"Quiz 2011 48","added_on":"2011-12-01 18:19:30","questions":[{"question":"1. When an economy is running a current account deficit, national income movements will ensure that only one of the two remaining sectors can spend less than they receive, irrespective of the GDP growth rate.","ID":"709","explanation":"","answers":[{"ID":"3966","answer":"False","correct":"0"},{"ID":"3965","answer":"True","correct":"1"}]},{"question":"2. Unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government debt, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"710","explanation":"","answers":[{"ID":"3968","answer":"False","correct":"1"},{"ID":"3967","answer":"True","correct":"0"}]},{"question":"3. Standing facilities that central banks maintain means that the monetary base always adjusts to the changes in the money supply.","ID":"711","explanation":"","answers":[{"ID":"3976","answer":"False","correct":"0"},{"ID":"3975","answer":"True","correct":"1"}]},{"question":"4. A redistribution of national income towards profits occurs when nominal wages growth lags behind the inflation rate.","ID":"712","explanation":"","answers":[{"ID":"3980","answer":"False","correct":"1"},{"ID":"3979","answer":"True","correct":"0"}]},{"question":"5. Premium Question: While Modern Monetary Theory (MMT) indicates there is no particular economic or financial significance of a rising public debt ratio for a sovereign currency-issuing nation it recognises the political constraints that governments operate within. Accordingly, it recognises there is a trade-off between the need to run budget surpluses to reduce the public debt ratio and the political problems that austerity brings.","ID":"713","explanation":"","answers":[{"ID":"3974","answer":"False","correct":"1"},{"ID":"3973","answer":"True","correct":"0"}]}]}, {"ID":"142","name":"Quiz 2011 49","added_on":"2011-12-09 10:11:24","questions":[{"question":"1. If the European Commission successfully alters the Treaty such that member states are forced to run balanced budgets and each year they successfully achieve that goal then the private sector in nations that run external deficits will always spend less than they earn.","ID":"714","explanation":"","answers":[{"ID":"3992","answer":"False","correct":"1"},{"ID":"3991","answer":"True","correct":"0"}]},{"question":"2. If the OECD/IMF output gap measures are biased downwards, then other things equal, we will conclude that the government"s discretionary fiscal stance is more expansionary than it actually is.","ID":"715","explanation":"","answers":[{"ID":"3994","answer":"False","correct":"0"},{"ID":"3993","answer":"True","correct":"1"}]},{"question":"3. The non-government sector does not enjoy an increase in its asset holdings when a sovereign government issues debt.","ID":"716","explanation":"","answers":[{"ID":"3996","answer":"False","correct":"0"},{"ID":"3995","answer":"True","correct":"1"}]},{"question":"4. In a fixed coupon government bond auction, the higher is the demand for the bonds the lower the yields will be at that asset maturity which suggests that higher budget deficits will eventually drive short-term interest rates down.","ID":"717","explanation":"","answers":[{"ID":"4000","answer":"False","correct":"1"},{"ID":"3999","answer":"True","correct":"0"}]},{"question":"5. Premium question: In a situation where the private domestic sector decides to lift its saving ratio we cannot conclude that the national government has to increase its net spending (deficit) to avoid employment losses.","ID":"718","explanation":"","answers":[{"ID":"4002","answer":"False","correct":"0"},{"ID":"4001","answer":"True ","correct":"1"}]}]}, {"ID":"143","name":"Quiz 2011 50","added_on":"2011-12-16 07:25:22","questions":[{"question":"1. What the fiscal austerity proponents do not understand, is that once economic growth resumes the automatic stabilisers built into the budget always work counter-cyclically and reduce the budget balance to its appropriate level.","ID":"719","explanation":"","answers":[{"ID":"4014","answer":"False","correct":"1"},{"ID":"4013","answer":"True","correct":"0"}]},{"question":"2. The accumulated stock of spending associated with continuous budget deficits may eventually increase the risk of inflation faced by an economy.","ID":"720","explanation":"","answers":[{"ID":"4016","answer":"False","correct":"1"},{"ID":"4015","answer":"True","correct":"0"}]},{"question":"3. We would never observe a nation running a current account deficit and budget surplus equal to 2 per cent of GDP, while the private domestic sector was spending more than it is earning.","ID":"721","explanation":"","answers":[{"ID":"4026","answer":"False","correct":"1"},{"ID":"4025","answer":"True","correct":"0"}]},{"question":"4. The IMF and the OECD typically evaluate government fiscal stance using estimates of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) to represent full employment. If true full employment is less than the estimated NAIRU then these organisations will always consider the discretionary fiscal position to be more expansionary than it actually is.","ID":"722","explanation":"","answers":[{"ID":"4020","answer":"False","correct":"0"},{"ID":"4019","answer":"True","correct":"1"}]},{"question":"5. Premium Question: One reason to favour the continued issuing of government debt when the government runs a deficit is that it increases the net worth of the non-government sector.","ID":"723","explanation":"","answers":[{"ID":"4022","answer":"False","correct":"1"},{"ID":"4021","answer":"True","correct":"0"}]}]}, {"ID":"144","name":"Quiz 2011 51 - Santa edition","added_on":"2011-12-22 21:08:17","questions":[{"question":"1. 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 spend less than they earn.","ID":"724","explanation":"","answers":[{"ID":"4058","answer":"False","correct":"0"},{"ID":"4057","answer":"True","correct":"1"}]},{"question":"2. A leakage from the spending system can occur via taxation, imports or saving which reduces the expenditure multiplier effect of government spending. Another leakage which reduces the expansionary impact of government deficit spending on aggregate demand occurs when the government matches the deficit with debt-issuance which drains private sector purchasing power.","ID":"725","explanation":"","answers":[{"ID":"4054","answer":"False","correct":"1"},{"ID":"4053","answer":"True","correct":"0"}]},{"question":"3. With reserve requirements low or zero, bank lending is capital-constrained rather than reserve constrained. But that would change if, for example, the central bank forced banks to maintain a reserve ratio of 100 per cent.","ID":"726","explanation":"","answers":[{"ID":"4056","answer":"False","correct":"1"},{"ID":"4055","answer":"True","correct":"0"}]},{"question":"4. The published government deficit outcome each year summarises the economic policy stance chosen by government.","ID":"727","explanation":"","answers":[{"ID":"4046","answer":"False","correct":"1"},{"ID":"4045","answer":"True","correct":"0"}]},{"question":"5. Premium Question: In Year 1, the economy goes into recession with nominal GDP growth falling to minus -1 per cent for the year. The inflation rate is subdued at 1 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The governments primary budget deficit is recorded as 1 per cent of GDP and the debt ratio rises by 3 per cent. In Year 2, the government stimulates the economy and pushes the budget deficit (net of interest payments) out to 2 per cent of GDP. This discretionary fiscal decision stimulates aggregate demand and the economy recovers with a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the rate of increase in the debt ratio will fall by an amount less than the rise in the budget deficit because of the real growth in the economy.","ID":"728","explanation":"","answers":[{"ID":"4044","answer":"False","correct":"1"},{"ID":"4043","answer":"True","correct":"0"}]},{"question":"6. Special Santa Question: The largest challenge facing the world in the face of anthropomorphic climate change is:","ID":"729","explanation":"","answers":[{"ID":"4050","answer":"Santa might have to relocate as the North Pole melts.","correct":"1"},{"ID":"4049","answer":"Increased drought and storm activity.","correct":"0"},{"ID":"4048","answer":"Sea levels are rising.","correct":"0"},{"ID":"4047","answer":"The glaciers are melting.","correct":"0"}]}]}, {"ID":"145","name":"Quiz 2011 52 - Last day of the year edition","added_on":"2011-12-30 10:15:56","questions":[{"question":"1. The government has two macroeconomic policy arms available - fiscal and monetary policy. However, it only has control over monetary policy.","ID":"730","explanation":"","answers":[{"ID":"4070","answer":"False","correct":"0"},{"ID":"4069","answer":"True","correct":"1"}]},{"question":"2. Americans enjoy a higher material standard of living as a result of the Chinese holdings of US government debt.","ID":"731","explanation":"","answers":[{"ID":"4072","answer":"False","correct":"0"},{"ID":"4071","answer":"True","correct":"1"}]},{"question":"3. The creation of a sovereign wealth fund from the proceeds of a budget surplus represents increased national savings. ","ID":"732","explanation":"","answers":[{"ID":"4074","answer":" False","correct":"1"},{"ID":"4073","answer":"True","correct":"0"}]},{"question":"4. Engaging unemployed workers in a government public works program to dig a large hole and fill it in again on a daily basis will provide no enduring benefit to national income.","ID":"733","explanation":"","answers":[{"ID":"4078","answer":"False","correct":"1"},{"ID":"4077","answer":"True","correct":"0"}]},{"question":"5. Premium Question: A strategy to force the government to balance its budget means that the private domestic sector has to be continously accumulating debt overall unless the current account moves into surplus.","ID":"734","explanation":"","answers":[{"ID":"4080","answer":"False","correct":"0"},{"ID":"4079","answer":"True","correct":"1"}]}]}, {"ID":"146","name":"Quiz 2012 - 1 - First Quiz for 2012","added_on":"2012-01-06 12:12:45","questions":[{"question":"1. Assuming the expenditure multiplier is greater than 1, deficit spending will have a greater impact on aggregate demand if there are no offsetting monetary operations by the central bank (government bond sales) draining the excess reserves created.","ID":"735","explanation":"","answers":[{"ID":"4098","answer":"False","correct":"1"},{"ID":"4097","answer":"True","correct":"0"}]},{"question":"2. If the government achieves in reducing its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"736","explanation":"","answers":[{"ID":"4096","answer":"False","correct":"1"},{"ID":"4095","answer":"True ","correct":"0"}]},{"question":"3. The non-government sector is wealthier when the government issues debt to exactly match ($-for-$) its increase in net public spending.","ID":"737","explanation":"","answers":[{"ID":"4108","answer":"False","correct":"1"},{"ID":"4107","answer":"True","correct":"0"}]},{"question":"4. When a country runs an external surplus, the national government can safely run a budget surplus without impeding economic growth.","ID":"738","explanation":"","answers":[{"ID":"4102","answer":"False","correct":"1"},{"ID":"4101","answer":"True ","correct":"0"}]},{"question":"5. Premium Question: Which budget deficit outcome is the most expansionary?","ID":"739","explanation":"","answers":[{"ID":"4103","answer":"(a) 1 per cent of GDP","correct":"0"},{"ID":"4104","answer":"(b) 2 per cent of GDP","correct":"0"},{"ID":"4105","answer":"(c) 3 per cent of GDP","correct":"1"},{"ID":"4106","answer":"(d) Depends on the decomposition of the structural and cyclical components.","correct":"0"}]}]}, {"ID":"147","name":"Quiz 2012 - 2","added_on":"2012-01-13 11:13:08","questions":[{"question":"1. A falling wage share in national income, a characteristic feature of many advanced nations over the last few decades, indicates that workers" real living standards are being eroded in these countries.","ID":"740","explanation":"","answers":[{"ID":"4120","answer":"False","correct":"1"},{"ID":"4119","answer":"True","correct":"0"}]},{"question":"2. Real wages increases require the rate of growth in nominal earnings to outstrip the growth in labour productivity.","ID":"741","explanation":"","answers":[{"ID":"4122","answer":"False ","correct":"1"},{"ID":"4121","answer":"True","correct":"0"}]},{"question":"3. Assume the central bank keeps the inflation rate steady and equal to the nominal interest rate. Under these monetary conditions it remains true that pushing the primary budget balance into surplus can drive down the public debt ratio even if the fiscal austerity causes a recession.","ID":"742","explanation":"","answers":[{"ID":"4132","answer":"False","correct":"0"},{"ID":"4131","answer":"True","correct":"1"}]},{"question":"4. The government has to issue debt if the central bank is targetting, say a 3 per cent short-term interest rate and declines to pay a return on excess bank reserves.","ID":"743","explanation":"","answers":[{"ID":"4130","answer":"False","correct":"0"},{"ID":"4129","answer":"True","correct":"1"}]},{"question":"5. Premium Question: The EU/IMF/ECB strategy for ailing Eurozone nations is twofold. First, engineer a cut in real wages to improve external competitiveness. Second, push the government back into surplus. The aim is for net exports to grow and replace the loss of spending arising from fiscal austerity. Suppose that the government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.","ID":"744","explanation":"","answers":[{"ID":"4126","answer":"False","correct":"0"},{"ID":"4125","answer":"True","correct":"1"}]}]}, {"ID":"148","name":"Quiz 2012 - 3","added_on":"2012-01-20 07:28:55","questions":[{"question":"1. A program of fiscal austerity will always undermine attempts by the private domestic sector to reduce its indebtedness when the nation exports less than they import (including net income flows).","ID":"745","explanation":"","answers":[{"ID":"4158","answer":"False","correct":"0"},{"ID":"4157","answer":"True","correct":"1"}]},{"question":"2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"746","explanation":"","answers":[{"ID":"4149","answer":"A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"4150","answer":"A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"4151","answer":"A nation can run a current account deficit with a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"4152","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]},{"question":"3. The public debt ratio is of no concern because economic growth will always bring it down after a recession.","ID":"747","explanation":"","answers":[{"ID":"4156","answer":"False","correct":"1"},{"ID":"4155","answer":"True","correct":"0"}]},{"question":"4. A rising level of bank reserves will make it easier for banks to expand credit to the private sector.","ID":"748","explanation":"","answers":[{"ID":"4160","answer":"False","correct":"1"},{"ID":"4159","answer":"True ","correct":"0"}]},{"question":"5. Premium Question: One of the reasons that motivate a government to issue debt and introduce rules that prevent their central banks from directly \\\"funding\\\" deficit spending is because such practices reduces the inflation risk of such spending by draining demand capacity from the private sector.","ID":"749","explanation":"","answers":[{"ID":"4148","answer":"False","correct":"1"},{"ID":"4147","answer":"True","correct":"0"}]}]}, {"ID":"149","name":"Quiz 2012 - 4","added_on":"2012-01-27 08:47:58","questions":[{"question":"1. During the American Civil War, the Confederate states experienced rising inflation as a result of their war spending in 1861. The Confederate Government could have eased the inflationary impact of this spending by issuing more bonds than it did.","ID":"750","explanation":"","answers":[{"ID":"4172","answer":"False","correct":"1"},{"ID":"4171","answer":"True","correct":"0"}]},{"question":"2. Eurozone nations can only alter their international competitiveness by reducing domestic wages and prices because they no longer have a floating currency. ","ID":"751","explanation":"","answers":[{"ID":"4180","answer":"False","correct":"1"},{"ID":"4179","answer":"True","correct":"0"}]},{"question":"3. Modern Monetary Theory (MMT) is consistent with the claim that government spending can crowd out private spending.","ID":"752","explanation":"","answers":[{"ID":"4182","answer":"False","correct":"0"},{"ID":"4181","answer":"True","correct":"1"}]},{"question":"4. In its latest Monthly Budget Review, the US Congressional Budget Office announced that the US \\\"federal budget deficit was $320 billion for the first quarter of fiscal year 2012 ... $49 billion less than the deficit recorded in the same period in fiscal year 2011\\\". Without knowing anything further, you would conclude that the US government has been cutting its discretionary net spending.","ID":"753","explanation":"","answers":[{"ID":"4178","answer":"False","correct":"1"},{"ID":"4177","answer":"True","correct":"0"}]},{"question":"5. Premium Question: When net exports are negative, government deficits are required if private households are to save overall.","ID":"754","explanation":"","answers":[{"ID":"4174","answer":"False","correct":"1"},{"ID":"4173","answer":"True","correct":"0"}]}]}, {"ID":"150","name":"Quiz 2012 - 5","added_on":"2012-02-03 08:13:32","questions":[{"question":"1. The distribution of national income has shifted in most advanced nations over the last two decades in favour of profits. This trend will only stabilise if workers can secure wage increases in line with the growth of labour productivity.","ID":"755","explanation":"","answers":[{"ID":"4194","answer":"False","correct":"1"},{"ID":"4193","answer":"True","correct":"0"}]},{"question":"2. The ratio of the broad measure of the money supply (M2) to the monetary base has fallen dramatically in the US in recent years. This tells us that the mainstream macroeconomics concept of the money multiplier is false.","ID":"756","explanation":"","answers":[{"ID":"4204","answer":"False","correct":"1"},{"ID":"4203","answer":"True","correct":"0"}]},{"question":"3. The real spending capacity of a currency-issuing government is constrained by the tax revenue it generates.","ID":"757","explanation":"","answers":[{"ID":"4198","answer":"False","correct":"0"},{"ID":"4197","answer":"True","correct":"1"}]},{"question":"4. In its latest World Economic Outlook Update (issued January 2012), the IMF said that \\\"countries should let automatic stabilizers operate freely for as long as they can readily finance higher deficits\\\". In general, the IMF estimates of these automatic stabilisers are biased upwards.","ID":"758","explanation":"","answers":[{"ID":"4206","answer":"False","correct":"1"},{"ID":"4205","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Under current public sector debt-issuance arrangements (where sovereign governments match their deficits with issues of debt), the government and the private domestic sectors can simultaneously reduce their debt levels.","ID":"759","explanation":"","answers":[{"ID":"4202","answer":"False","correct":"0"},{"ID":"4201","answer":"True","correct":"1"}]}]}, {"ID":"151","name":"Quiz 2012 - 6","added_on":"2012-02-09 17:49:59","questions":[{"question":"1. Bank lending moved from being reserve-constrained to capital-constrained once the prudential authorities relaxed reserve ratio requirements and the Bank of International Settlements introduced the Basel framework for capital adequacy.","ID":"760","explanation":"","answers":[{"ID":"4218","answer":"False","correct":"1"},{"ID":"4217","answer":"True","correct":"0"}]},{"question":"2. In an endogenous money system a central bank cannot simultaneously reduce bank lending and maintain a given positive target interest rate by increasing the rate that it provides reserves on demand to the commercial banks.","ID":"761","explanation":"","answers":[{"ID":"4228","answer":"False","correct":"0"},{"ID":"4227","answer":"True","correct":"1"}]},{"question":"3. In the context of population ageing, the fact that a sovereign government is never financially constrained means that it will always be able to provide first-class health care.","ID":"762","explanation":"","answers":[{"ID":"4222","answer":"False","correct":"1"},{"ID":"4221","answer":"True ","correct":"0"}]},{"question":"4. By increasing tax rates a sovereign government increases its capacity to spend more without increasing inflation.","ID":"763","explanation":"","answers":[{"ID":"4224","answer":"False","correct":"0"},{"ID":"4223","answer":"True","correct":"1"}]},{"question":"5. Premium Question: For a nation running a small current account deficit, the government budget will always be in deficit if the domestic private sector is spending less than it earns.","ID":"764","explanation":"","answers":[{"ID":"4226","answer":"False","correct":"0"},{"ID":"4225","answer":"True","correct":"1"}]}]}, {"ID":"152","name":"Quiz 2012 - 7","added_on":"2012-02-17 04:10:28","questions":[{"question":"1. A nation that issues its own currency and floats it on international foreign exchange markets faces no solvency risk with respect to the debt it issues.","ID":"765","explanation":"","answers":[{"ID":"4252","answer":"False","correct":"1"},{"ID":"4251","answer":"True","correct":"0"}]},{"question":"2. Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP minus the changes in the monetary base arising from official foreign exchange transactions conducted by the central bank.","ID":"766","explanation":"","answers":[{"ID":"4242","answer":"False","correct":"1"},{"ID":"4241","answer":"True","correct":"0"}]},{"question":"3. By investing budget surpluses in a sovereign fund a government creates more space for non-inflationary public spending in the future.","ID":"767","explanation":"","answers":[{"ID":"4244","answer":"False","correct":"1"},{"ID":"4243","answer":"True","correct":"0"}]},{"question":"4. Consider a government that increases spending by $100 billion in the each of the next three years. Economists estimate the spending multiplier (which is the multiple by which income increases for a given injection of spending) to be 1.5 and the impact is immediate and exhausted in each year. They also estimate that the import propensity is 0.2 (meaning that imports rise by 20 cents for every dollar generated in the economy). They also estimate the tax multiplier (impact of tax changes on income) to be equal to 1 and the current tax rate is equal to 30 per cent. So for every extra dollar produced, tax revenue rises by 30 cents. Which of the following statements is correct? The cumulative impact of this fiscal expansion on nominal GDP is:","ID":"768","explanation":"","answers":[{"ID":"4245","answer":"$450 billion and the private sector saves 24 cents out of every extra dollar generated.","correct":"1"},{"ID":"4246","answer":"$450 billion and the private sector saves 28 cents out of every extra dollar generated.","correct":"0"},{"ID":"4247","answer":"$315 billion and the private sector saves 24 cents out of every extra dollar generated.","correct":"0"},{"ID":"4248","answer":"$315 billion and the private sector saves 28 cents out of every extra dollar generated.","correct":"0"}]},{"question":"5. Premium Question: Ignoring laws to the contrary, a central bank currently targetting a 3 per cent short-term policy rate, cannot directly purchase treasury debt to facilitate the national governments budget deficit (that is, \\\"monetise the deficit\\\") because otherwise it would lose control of its policy target.","ID":"769","explanation":"","answers":[{"ID":"4250","answer":"False","correct":"1"},{"ID":"4249","answer":"True","correct":"0"}]}]}, {"ID":"153","name":"Quiz 2012 - 8","added_on":"2012-02-24 08:28:39","questions":[{"question":"1. If a nation"s external sector is in balance (and thus making no contribution to real GDP growth) then the private domestic sector cannot save overall if the government runs a balanced budget.","ID":"770","explanation":"","answers":[{"ID":"4320","answer":"False","correct":"0"},{"ID":"4319","answer":"True","correct":"1"}]},{"question":"2. A tax increase, which aims to increase tax revenue at the current level of national income by $x, will have a smaller initial negative impact on aggregate demand than a government spending cut of $x?","ID":"771","explanation":"","answers":[{"ID":"4268","answer":"False","correct":"0"},{"ID":"4267","answer":"True","correct":"1"}]},{"question":"3. During a recession, a government should use expansionary fiscal policy to restore trend real GDP growth if it wants to reduce unemployment rate.","ID":"772","explanation":"","answers":[{"ID":"4270","answer":"False","correct":"1"},{"ID":"4269","answer":"True","correct":"0"}]},{"question":"4. In many nations, private households are increasing their saving ratios (from disposable income) and firms are declining to invest. These trends indicate that budget deficits have to be higher to avoid further employment losses.","ID":"773","explanation":"","answers":[{"ID":"4272","answer":"False","correct":"1"},{"ID":"4271","answer":"True","correct":"0"}]},{"question":"5. Premium Question: If the external sector is accumulating financial claims on the local economy and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can run surpluses without damaging employment growth.","ID":"774","explanation":"","answers":[{"ID":"4274","answer":"False","correct":"1"},{"ID":"4273","answer":"True","correct":"0"}]}]}, {"ID":"154","name":"Quiz 2012 - 9","added_on":"2012-03-01 14:55:10","questions":[{"question":"1. As a matter of accounting, the financial assets held by the non-government sector rise $-for-$ when a sovereign government issues debt.","ID":"775","explanation":"","answers":[{"ID":"4286","answer":"False","correct":"1"},{"ID":"4285","answer":"True","correct":"0"}]},{"question":"2. When government bond yields for new issues start to rise, government spending becomes more expensive.","ID":"776","explanation":"","answers":[{"ID":"4292","answer":"False","correct":"1"},{"ID":"4291","answer":"True","correct":"0"}]},{"question":"3. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the domestic private sector cannot reduce its overall debt levels (by saving) without incurring employment losses.","ID":"777","explanation":"","answers":[{"ID":"4298","answer":"False","correct":"0"},{"ID":"4297","answer":"True","correct":"1"}]},{"question":"4. The imposition of fiscal rules which aim to limit the discretionary capacity of governments to net spend bias fiscal policy towards pro-cyclical responses when private spending is weak.","ID":"778","explanation":"","answers":[{"ID":"4296","answer":"False","correct":"0"},{"ID":"4295","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Open market operations as a means of ensuring that levels of bank reserves are consistent with the policy target become redundant whenever the central bank pays a positive interest rate on overnight reserves held by the commercial banks (ignore any reserve requirements in place when answering).","ID":"779","explanation":"","answers":[{"ID":"4290","answer":"False","correct":"1"},{"ID":"4289","answer":"True","correct":"0"}]}]}, {"ID":"155","name":"Quiz 2012 - 10","added_on":"2012-03-09 09:46:21","questions":[{"question":"1. Assume a nation is running an external surplus equivalent to 2 per cent of GDP and the private domestic sector is currently saving overall 1 per cent of GDP. In this situation, the government must be running a budget deficit equal to 1 per cent of GDP.","ID":"780","explanation":"","answers":[{"ID":"4310","answer":"False","correct":"1"},{"ID":"4309","answer":"True","correct":"0"}]},{"question":"2. Start from a situation where the external surplus is the equivalent of 2 per cent of GDP and the budget surplus is 2 per cent. If the budget balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then you can conclude that National income also rises and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","ID":"781","explanation":"","answers":[{"ID":"4312","answer":"False","correct":"0"},{"ID":"4311","answer":"True","correct":"1"}]},{"question":"3. If all bank loans had to be backed by reserves held at the bank then this would act as a brake on the capacity of the banks to lend and help maintain financial stability.","ID":"782","explanation":"","answers":[{"ID":"4314","answer":"False","correct":"1"},{"ID":"4313","answer":"True","correct":"0"}]},{"question":"4. The imposition of taxation is an essential element in a sovereign government"s plan to implement and provision its socio-economic agenda.","ID":"783","explanation":"","answers":[{"ID":"4318","answer":"False","correct":"0"},{"ID":"4317","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Assume a nation"s central bank successfully maintains a zero interest rate policy and recession keeps the inflation rate at zero. Under these circumstances a fiscal austerity program can achieve reductions in the public debt ratio even if the movements in the automatic stabilisers that result from the recession that the austerity causes reduce the growth of tax revenue.","ID":"784","explanation":"","answers":[{"ID":"4316","answer":"False","correct":"0"},{"ID":"4315","answer":"True","correct":"1"}]}]}, {"ID":"156","name":"Quiz 2012 - 11","added_on":"2012-03-16 08:21:04","questions":[{"question":"1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, until we know the relative magnitudes of these balances, we are unable to conclude the state of the fiscal balance.","ID":"785","explanation":"","answers":[{"ID":"4332","answer":"False","correct":"1"},{"ID":"4331","answer":"True","correct":"0"}]},{"question":"2. Private sector wealth is invariant to the decision by government to issues bonds to match its deficit spending as against not issuing any bonds.","ID":"786","explanation":"","answers":[{"ID":"4334","answer":"False","correct":"0"},{"ID":"4333","answer":"True","correct":"1"}]},{"question":"3. The stock of government spending continually rises when there are rising budget deficits.","ID":"787","explanation":"","answers":[{"ID":"4336","answer":"False","correct":"1"},{"ID":"4335","answer":"True","correct":"0"}]},{"question":"4. To reduce trade deficits, Eurozone nations are seeking to restore export competitiveness (within the Eurozone) by domestic deflation (reducing domestic wages and prices relative to other nations) given they do not have a flexible exchange rate. Export competitiveness will rise if they are successful with this strategy.","ID":"788","explanation":"","answers":[{"ID":"4338","answer":"False","correct":"1"},{"ID":"4337","answer":"True","correct":"0"}]},{"question":"5. Premium question: When a government records a budget surplus which means it is withdrawing more purchasing power from the economy than it is adding, we know that it is seeking to attenuate the growth in aggregate demand.","ID":"789","explanation":"","answers":[{"ID":"4340","answer":"False","correct":"1"},{"ID":"4339","answer":"True","correct":"0"}]}]}, {"ID":"157","name":"Quiz 2012 - 12","added_on":"2012-03-21 17:49:42","questions":[{"question":"1. The private domestic sector cannot save if a nation"s external sector is in balance (and thus making no contribution to real GDP growth) and the government runs a balanced budget.","ID":"790","explanation":"","answers":[{"ID":"4352","answer":"False","correct":"1"},{"ID":"4351","answer":"True","correct":"0"}]},{"question":"2. If we observed yields on 10-year bond yields rising it would be incorrect to conclude that bond markets are demanding increased risk premiums for these assets. nn","ID":"791","explanation":"","answers":[{"ID":"4354","answer":"False","correct":"0"},{"ID":"4353","answer":"True","correct":"1"}]},{"question":"3. If the household saving ratio rises and there is an external deficit then government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"792","explanation":"","answers":[{"ID":"4356","answer":"False","correct":"1"},{"ID":"4355","answer":"True","correct":"0"}]},{"question":"4. Modern Monetary Theory challenges the notion of the money multiplier but still accepts that continually expanding the money supply will inevitably be inflationary.","ID":"793","explanation":"","answers":[{"ID":"4358","answer":"False","correct":"1"},{"ID":"4357","answer":"True","correct":"0"}]},{"question":"5. Premium question: By voluntarily issuing debt to match its net spending, government borrowing from the private sector reduces the risk that public deficits will be inflationary.","ID":"794","explanation":"","answers":[{"ID":"4360","answer":"False","correct":"1"},{"ID":"4359","answer":"True","correct":"0"}]}]}, {"ID":"158","name":"Quiz 2012 - 13","added_on":"2012-03-29 18:38:15","questions":[{"question":"1. Economists use two multipliers to estimate the impact on GDP of an expansion in government spending associated with rising tax rates. The spending multiplier indicates the extent to which GDP rises as a result of the extra aggregate demand arising from the increased government spending. The tax multiplier indicates the impact of rising tax rates on GDP as labour supply is reduced because of the disincentives associated with taxation. The net effect on GDP is the sum of these two impacts.","ID":"795","explanation":"","answers":[{"ID":"4372","answer":"False","correct":"1"},{"ID":"4371","answer":"True","correct":"0"}]},{"question":"2. EMU member nations face solvency risk because they do not issue their own currency. This source of risk would not be eliminated if these nations exited the Eurozone and re-established their currency sovereignty - that is, issued their own floating currency.","ID":"796","explanation":"","answers":[{"ID":"4380","answer":"False","correct":"0"},{"ID":"4379","answer":"True","correct":"1"}]},{"question":"3. For a nation running a current account deficit, national income adjustments will ensure government budget is in deficit no matter what the government"s intentions are if the private domestic sector is spending less than its income.","ID":"797","explanation":"","answers":[{"ID":"4382","answer":"False","correct":"0"},{"ID":"4381","answer":"True","correct":"1"}]},{"question":"4. It would be impossible for a government to avoid issuing debt to the private sector when running a budget deficit while the central bank was targeting a positive short-term policy rate.","ID":"798","explanation":"","answers":[{"ID":"4386","answer":"False","correct":"1"},{"ID":"4385","answer":"True","correct":"0"}]},{"question":"5. Premium question: Assume that the government increases spending by $100 billion at the start of each year and maintains this policy for the next three years from now. Economists estimate the spending multiplier to be 1.5 and the impact is exhausted within each year (all induced consumption is completed within 12 months). The tax multiplier is estimated to be equal to 1 and the current tax rate is equal to 30 per cent (so tax revenue rises by 30 cents for every extra dollar of GDP produced ). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"799","explanation":"","answers":[{"ID":"4390","answer":"$450 billion","correct":"1"},{"ID":"4389","answer":"$315 billion","correct":"0"},{"ID":"4388","answer":"$150 billion","correct":"0"},{"ID":"4387","answer":"$135 billion","correct":"0"}]}]}, {"ID":"159","name":"Quiz 2012 - 14","added_on":"2012-04-06 10:28:22","questions":[{"question":"1. National accounting rules dictate that a national government surplus equals a non-government deficit (and vice-versa). If a national government successfully achieves a budget surplus through an austerity program then the private domestic sector must be spending more than it is earning.","ID":"800","explanation":"","answers":[{"ID":"4402","answer":"False","correct":"1"},{"ID":"4401","answer":"True","correct":"0"}]},{"question":"2. The relentless push by neo-liberals to cut real wages growth has ensured the share of national income going to profits has expanded over the last 30 years in many nations.","ID":"801","explanation":"","answers":[{"ID":"4404","answer":"False","correct":"1"},{"ID":"4403","answer":"True","correct":"0"}]},{"question":"3. If the stock of aggregate demand growth outstrips the capacity of the productive sector to respond by producing extra real goods and services then inflation is inevitable.","ID":"802","explanation":"","answers":[{"ID":"4406","answer":"False","correct":"1"},{"ID":"4405","answer":"True","correct":"0"}]},{"question":"4. The Australian dollar has appreciated strongly against many of the key currencies over the last few years as a result of record terms of trade and the strong world demand for mining output. The appreciating dollar has significantly reduced our international competitiveness and harmed other export sectors - manufacturing and agriculture - who have not enjoyed the same buoyant world demand for their output. Export competitiveness will rise under these conditions if local workers accept a cut in nominal wages and the rate of inflation is contained.","ID":"803","explanation":"","answers":[{"ID":"4416","answer":"False","correct":"1"},{"ID":"4415","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Unemployment can still rise when employment growth keeps pace with labour force growth.","ID":"804","explanation":"","answers":[{"ID":"4410","answer":"False","correct":"0"},{"ID":"4409","answer":"True","correct":"1"}]},{"question":"6. Special Holiday Question: The Easter Bunny thinks that banks do not need reserves to make loans. He is clearly correct and anyone, including the majority of mainstream economists and leading Op Ed writers in major city newspapers, are wrong on this point.","ID":"805","explanation":"","answers":[{"ID":"4414","answer":"Do not choose this option","correct":"0"},{"ID":"4413","answer":"True","correct":"1"}]}]}, {"ID":"160","name":"Quiz 2012 - 15","added_on":"2012-04-12 17:34:11","questions":[{"question":"1. Central banks provide reserves to the commercial banking system usually at some penalty rate. However, this compromises their capacity to target a given monetary policy rate.","ID":"806","explanation":"","answers":[{"ID":"4428","answer":"False","correct":"0"},{"ID":"4427","answer":"True","correct":"1"}]},{"question":"2. If the real interest rate (difference between nominal interest rate and inflation) is constant, then a currency-isuing government, which matches its net spending $-for-$ with debt issuance, could double its budget deficit without pushing up the public debt ratio.","ID":"807","explanation":"","answers":[{"ID":"4430","answer":"False","correct":"0"},{"ID":"4429","answer":"True","correct":"1"}]},{"question":"3. The wage share in national income in many nations has fallen significantly over the neo-liberal period which signals that the real standard of living for workers has been falling.","ID":"808","explanation":"","answers":[{"ID":"4432","answer":"False","correct":"1"},{"ID":"4431","answer":"True ","correct":"0"}]},{"question":"4. The Eurozone Troika"s strategy for Greece is that domestic deflation will spark an export boom and provide the capacity for the government to run primary surpluses without compromising real economic growth. Although an export boom is unlikely, given current circumstances, if Greece actually achieved positive net exports then the government could push for a primary budget surplus knowing it will not compromise growth.","ID":"809","explanation":"","answers":[{"ID":"4444","answer":"False","correct":"1"},{"ID":"4443","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current interest rate target. If on average the government collects an income tax of 20 cents in the dollar, then total tax revenue will rise by 0.20 times $x if government spending increases (once and for all) by $X dollars and private investment and exports remain unchanged.","ID":"810","explanation":"","answers":[{"ID":"4442","answer":"False","correct":"1"},{"ID":"4441","answer":"True","correct":"0"}]}]}, {"ID":"161","name":"Quiz 2012 - 16","added_on":"2012-04-20 14:26:57","questions":[{"question":"1. At present Greece (and all the EMU member nations) face insolvency risk because they use a foreign currency (the Euro). By leaving the Euro and issuing their own currencies, these nations would eliminate that risk on all their future liabilities.","ID":"811","explanation":"","answers":[{"ID":"4456","answer":"False","correct":"1"},{"ID":"4455","answer":"True","correct":"0"}]},{"question":"2. When a nation is generating large external surpluses, it can create more space for non-inflationary spending in the future if the government runs budget surpluses and accumulates them in a sovereign fund.","ID":"812","explanation":"","answers":[{"ID":"4458","answer":"False","correct":"1"},{"ID":"4457","answer":"True","correct":"0"}]},{"question":"3. The OECD has just published their latest analysis of the fiscal situation in the world economy. Their estimates will usually lead one to conclude that a government"s discretionary fiscal position is more expansionary than it actually is. ","ID":"813","explanation":"","answers":[{"ID":"4460","answer":"False","correct":"0"},{"ID":"4459","answer":"True","correct":"1"}]},{"question":"4. A nation can run a external deficit accompanied by a government sector surplus, which is of a larger proportion to GDP than the external balance), while the private domestic sector is spending less than they are earning.","ID":"814","explanation":"","answers":[{"ID":"4462","answer":"False","correct":"1"},{"ID":"4461","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Under current institutional arrangements (where deficits are matched $-for-$ by debt-issuance), the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP minus the changes in the monetary base arising from official foreign exchange transactions. ","ID":"815","explanation":"","answers":[{"ID":"4464","answer":"False","correct":"1"},{"ID":"4463","answer":"True","correct":"0"}]}]}, {"ID":"162","name":"Quiz 2012 - 17","added_on":"2012-04-25 18:29:23","questions":[{"question":"1. Assume that the national accounts of a nation is reveal that its external surplus is equivalent to 2 per cent of GDP and the private domestic sector is saving overall 3 per cent of GDP. We would also observe:","ID":"816","explanation":"","answers":[{"ID":"4475","answer":"A budget deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"4476","answer":"A budget surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"4477","answer":"A budget deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"4478","answer":"A budget surplus equal to 5 per cent of GDP.","correct":"0"}]},{"question":"2. Given a fiat currency issuing nation is not revenue constrained, it is incorrect to say that recipients of income support provided by such a national government are living off the hard work of those who pay income taxes.","ID":"817","explanation":"","answers":[{"ID":"4480","answer":"False","correct":"1"},{"ID":"4479","answer":"True","correct":"0"}]},{"question":"3. The British government"s budget deficit rose in March 2012. We can conclude from that result that it is still pursuing an expansionary fiscal policy despite the political rhetoric about austerity.","ID":"818","explanation":"","answers":[{"ID":"4482","answer":"False","correct":"1"},{"ID":"4481","answer":"True ","correct":"0"}]},{"question":"4. There is no difference in terms of the impact on aggregate demand, between the government matching its deficit spending with bond issues and the situation where the government instructed the central bank to buy its bonds to match the deficit. ","ID":"819","explanation":"","answers":[{"ID":"4484","answer":"False","correct":"0"},{"ID":"4483","answer":"True","correct":"1"}]},{"question":"5. Premium Question: In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 2 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 2 per cent (and this is the rate the government pays on all outstanding debt). The government"s budget balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 4 per cent. In Year 2, the government stimulates the economy and pushes the primary budget deficit out to 4 per cent of GDP in recognition of the severity of the recession. In doing so it stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. The central bank holds the nominal interest rate constant but inflation falls to 1 per cent given the slack nature of the economy the previous year. Under these circumstances, the public debt ratio falls even though the budget deficit has risen because of the real growth in the economy.","ID":"820","explanation":"","answers":[{"ID":"4486","answer":"False","correct":"1"},{"ID":"4485","answer":"True","correct":"0"}]}]}, {"ID":"163","name":"Quiz 2012 - 18","added_on":"2012-05-04 11:32:22","questions":[{"question":"1. The automatic stabilisers built into national government budgeting are at present operating in a counter-cyclical manner in the Eurozone.","ID":"821","explanation":"","answers":[{"ID":"4498","answer":"False","correct":"0"},{"ID":"4497","answer":"True","correct":"1"}]},{"question":"2. In the absence of exchange rate flexibility, the Eurozone member states are undertaking painful internal devaluation designed to deflate nominal wages and prices to facilitate increased external competitiveness. The aim, say for Greece, is to reduce its real unit labour costs faster than their trading partners can. For the logic to follow then if wages and prices fall at the same rate, labour productivity has to rise and employment has to fall.","ID":"822","explanation":"","answers":[{"ID":"4500","answer":"False","correct":"1"},{"ID":"4499","answer":"True","correct":"0"}]},{"question":"3. A nation can run a current account deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit) as long as the private domestic sector is spending less than they are earning.","ID":"823","explanation":"","answers":[{"ID":"4502","answer":"False","correct":"1"},{"ID":"4501","answer":"True","correct":"0"}]},{"question":"4. To ensure that the financial system is stable, the central bank has to allow the money supply to be driven by the monetary base.","ID":"824","explanation":"","answers":[{"ID":"4504","answer":"False","correct":"1"},{"ID":"4503","answer":"True","correct":"0"}]},{"question":"5. Premium Question: The spending by a sovereign government becomes more expensive when the bond markets push yields on new bond issues up.","ID":"825","explanation":"","answers":[{"ID":"4506","answer":"False","correct":"1"},{"ID":"4505","answer":"True","correct":"0"}]}]}, {"ID":"164","name":"Quiz 2012 - 19","added_on":"2012-05-10 17:51:17","questions":[{"question":"1. The non-government sector are wealthier when a government issues bonds by the government to match its budget deficit. ","ID":"826","explanation":"","answers":[{"ID":"4518","answer":" False","correct":"1"},{"ID":"4517","answer":"True","correct":"0"}]},{"question":"2. Ignoring any reserve requirements, a central bank will eliminate any need to conduct open market operations to ensure its target policy rate is achieved each day by paying a positive interest rate on overnight reserves.","ID":"827","explanation":"","answers":[{"ID":"4526","answer":"False","correct":"1"},{"ID":"4525","answer":"True","correct":"0"}]},{"question":"3. Ignoring any reserve requirements, bank reserves will be higher than otherwise if the central bank pays a positive return on overnight reserves held by the commercial banks equal to its current policy rate.","ID":"828","explanation":"","answers":[{"ID":"4528","answer":"False","correct":"0"},{"ID":"4527","answer":"True","correct":"1"}]},{"question":"4. When a country runs a small current account deficit and the private domestic sector is saving overall, the government budget balance will always be in deficit.","ID":"829","explanation":"","answers":[{"ID":"4524","answer":"False","correct":"0"},{"ID":"4523","answer":"True","correct":"1"}]},{"question":"5. Premium question: Most major political parties around the world support the imposition of austerity budgets on their economies. The major difference is that so-called \\\"progressives\\\" prefer tax rises rather than spending cuts whereas so-called \\\"conservatives\\\" recommend spending cuts and privatisation. In terms of the initial impact on national income, which policy option will be more damaging - a tax increase which aims to increase tax revenue at the current level of national income by $x or a spending cut of $x?","ID":"830","explanation":"","answers":[{"ID":"4519","answer":"Tax increase","correct":"0"},{"ID":"4520","answer":"Spending cut","correct":"1"},{"ID":"4521","answer":"Both will be equivalent","correct":"0"},{"ID":"4522","answer":"There is not enough information to answer this question","correct":"0"}]}]}, {"ID":"165","name":"Quiz 2012 - 20","added_on":"2012-05-16 18:04:37","questions":[{"question":"1. Real wages in Greece rose during the Euro period leading up to the crisis because the rate of growth in earnings outstripped its low labour productivity growth.","ID":"831","explanation":"","answers":[{"ID":"4540","answer":"False","correct":"1"},{"ID":"4539","answer":"True","correct":"0"}]},{"question":"2. Quantitative easing aims to stimulate aggregate demand by reducing long-term investment rates whereas deficit spending aims to stimulate aggregate demand via tax cuts or direct public spending. Both policies ultimately work by increasing the net financial assets held by the non-government sector.","ID":"832","explanation":"","answers":[{"ID":"4548","answer":"False","correct":"1"},{"ID":"4547","answer":"True","correct":"0"}]},{"question":"3. In last week"s 2012-13 Budget, the Australian government indicated that it aimed to achieve a budget surplus of 0.1 per cent of GDP in the next financial year. The aim underpins a massive fiscal shift from a budget deficit of around 3 per cent of GDP in 2011-12. If the actual budget outcome remains in deficit at the end of the next financial year the Australian government will be rightly considered not to have gone hard enough on its fiscal austerity plans.","ID":"833","explanation":"","answers":[{"ID":"4544","answer":"False","correct":"1"},{"ID":"4543","answer":"True","correct":"0"}]},{"question":"4. Modern Monetary Theory (MMT) brings an understanding of the way central banks purchase and sell government bonds to manage liquidity in the overnight cash markets and thus sustain their target rate of interest. MMT also leads to the conclusion that a central bank could still increase interest rates even if the US government instructed it to directly purchase treasury debt to facilitate the national governments budget deficit.","ID":"834","explanation":"","answers":[{"ID":"4550","answer":"False","correct":"0"},{"ID":"4549","answer":"True","correct":"1"}]},{"question":"5. Premium Question: In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1.0 per cent. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The inflation rate is stable at 1 per cent per annum. The government"s primary budget balance records a deficit equivalent to 1 per cent of GDP and the public debt ratio rises by 3 per cent. In Year 2, the government pushes the primary budget deficit out to 2 per cent of GDP and in doing so stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio will rise but by an amount less than the rise in the budget deficit because of the real growth in the economy.","ID":"835","explanation":"","answers":[{"ID":"4546","answer":"False","correct":"1"},{"ID":"4545","answer":"True","correct":"0"}]}]}, {"ID":"166","name":"Quiz 2012 - 21","added_on":"2012-05-25 12:30:49","questions":[{"question":"1. When an economy is running a current account deficit, national income movements will ensure that only one of the two remaining sectors (government and private domestic) end up spending less than they receive, irrespective of the GDP growth rate.","ID":"836","explanation":"","answers":[{"ID":"4562","answer":"False","correct":"0"},{"ID":"4561","answer":"True","correct":"1"}]},{"question":"2. Unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government debt, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"837","explanation":"","answers":[{"ID":"4564","answer":"False","correct":"1"},{"ID":"4563","answer":"True","correct":"0"}]},{"question":"3. Standing facilities (credit lines etc) that central banks maintain means that the monetary base always adjusts to the changes in the money supply.","ID":"838","explanation":"","answers":[{"ID":"4566","answer":"False","correct":"0"},{"ID":"4565","answer":"True","correct":"1"}]},{"question":"4. Over the last two decades, there have been major redistributions of national income towards profits in many nations. This has occurred as a result of the suppression of real wages growth.","ID":"839","explanation":"","answers":[{"ID":"4568","answer":"False","correct":"1"},{"ID":"4567","answer":"True","correct":"0"}]},{"question":"5. Premium Question: While Modern Monetary Theory (MMT) indicates there is no particular economic or financial significance of a rising public debt ratio for a sovereign currency-issuing nation it recognises the political constraints that governments operate within. Accordingly, it recognises there is a trade-off between the need to run budget surpluses to reduce the public debt ratio and the political problems that austerity brings.","ID":"840","explanation":"","answers":[{"ID":"4570","answer":"False","correct":"1"},{"ID":"4569","answer":"True","correct":"0"}]}]}, {"ID":"167","name":"Quiz 2012 - 22","added_on":"2012-06-01 08:01:44","questions":[{"question":"1. If the European Commission successfully alters the Treaty such that member states are forced to run balanced budgets and each year they successfully achieve that goal then the private sector in nations that run external deficits will be always spend less than they earn.","ID":"841","explanation":"","answers":[{"ID":"4582","answer":"False","correct":"1"},{"ID":"4581","answer":"True","correct":"0"}]},{"question":"2. The British government received advice recently that said the estimated output gap measures was less than previously thought. If that advice was true, then other things equal, the government"s discretionary fiscal austerity would have to be intensified to balance the structural budget.","ID":"842","explanation":"","answers":[{"ID":"4584","answer":"False","correct":"0"},{"ID":"4583","answer":"True","correct":"1"}]},{"question":"3. When the private domestic sector decides to save more of its total income, the national government has to increase its net spending (deficit) to avoid output and employment losses.","ID":"843","explanation":"","answers":[{"ID":"4586","answer":"False","correct":"1"},{"ID":"4585","answer":"True","correct":"0"}]},{"question":"4. In a fixed coupon government bond auction, the higher is the demand for the bonds the lower the yields will be at that asset maturity which suggests that higher budget deficits will eventually drive short-term interest rates down.","ID":"844","explanation":"","answers":[{"ID":"4588","answer":"False","correct":"1"},{"ID":"4587","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Opponents of continuous budget deficits often agree that a short-period of deficit spending when the private demand is weak is not likely to be inflationary. Their main concern is that it is the accumulated stock of spending associated with continuous budget deficits that eventually increases the risk of inflation. Their concern has validity.","ID":"845","explanation":"","answers":[{"ID":"4590","answer":"False","correct":"1"},{"ID":"4589","answer":"True","correct":"0"}]}]}, {"ID":"168","name":"Quiz 2012 - 23","added_on":"2012-06-08 07:22:40","questions":[{"question":"1. Modern Monetary Theory teaches us that one of the dangers of public spending is that it can crowd out private spending.","ID":"846","explanation":"","answers":[{"ID":"4602","answer":"False","correct":"0"},{"ID":"4601","answer":"True","correct":"1"}]},{"question":"2. National accounting shows us that a government surplus equals a non-government deficit. But that doesn"t mean that if fiscal austerity ends up generating a budget surpluses that households and firms will be running deficits.","ID":"847","explanation":"","answers":[{"ID":"4604","answer":"False","correct":"0"},{"ID":"4603","answer":"True","correct":"1"}]},{"question":"3. A hallmark of the neo-liberal period has been the declining share of wages in national income which in part meant that economic growth became more dependent on credit to maintain growth in consumption spending. However it is not necessary for real wages to grow in the coming years to reverse that trend. So real wage cuts under austerity programs could increase the wage share.","ID":"848","explanation":"","answers":[{"ID":"4606","answer":"False","correct":"0"},{"ID":"4605","answer":"True","correct":"1"}]},{"question":"4. The payment of a positive interest return by the central bank on overnight bank reserves does not eliminate the need for it to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements). ","ID":"849","explanation":"","answers":[{"ID":"4608","answer":"False","correct":"0"},{"ID":"4607","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Mainstream economists have argued that the large scale quantitative easing conducted by central banks in recent years - so-called printing money - would be inflationary. They base their predictions on the Quantity Theory of Money which links the growth of the money stock to the inflation rate (too much money chasing too few goods). The fact that inflation is in retreat despite these programs does not refute the mainstream economic theory of inflation. ","ID":"850","explanation":"","answers":[{"ID":"4612","answer":"False","correct":"0"},{"ID":"4611","answer":"True","correct":"1"}]}]}, {"ID":"169","name":"Quiz 2012 - 24","added_on":"2012-06-15 11:15:23","questions":[{"question":"1. 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 spend less than they earn.","ID":"851","explanation":"","answers":[{"ID":"4624","answer":"False","correct":"0"},{"ID":"4623","answer":"True","correct":"1"}]},{"question":"2. When the government matches its deficit with debt-issuance which drains private sector purchasing power this is equivalent to a leakage from the expenditure system (akin to taxation, saving or imports) which reduces the expansionary impact of the government deficit spending.","ID":"852","explanation":"","answers":[{"ID":"4626","answer":"False","correct":"1"},{"ID":"4625","answer":"True","correct":"0"}]},{"question":"3. National income would rise each year even if the workers, as part of a employment guarantee program, were engaged to dig large holes and fill them in again on a daily basis.","ID":"853","explanation":"","answers":[{"ID":"4628","answer":"False","correct":"0"},{"ID":"4627","answer":"True","correct":"1"}]},{"question":"4. Which budget deficit outcome is the least expansionary?","ID":"854","explanation":"","answers":[{"ID":"4629","answer":"(a) 1 per cent of GDP","correct":"1"},{"ID":"4630","answer":"(b) 2 per cent of GDP","correct":"0"},{"ID":"4631","answer":"(c) 3 per cent of GDP","correct":"0"},{"ID":"4632","answer":"(d) Cannot say, it depends on the decomposition of the structural and cyclical components.","correct":"0"}]},{"question":"5. Premium Question: If the government reduces its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"855","explanation":"","answers":[{"ID":"4634","answer":"False","correct":"1"},{"ID":"4633","answer":"True","correct":"0"}]}]}, {"ID":"170","name":"Quiz 2012 - 25","added_on":"2012-06-20 07:34:48","questions":[{"question":"1. An external surplus is a necessary but not sufficient condition for a nation that wishes to grow during a period of fiscal surpluses and private domestic deleveraging.","ID":"856","explanation":"","answers":[{"ID":"4646","answer":"False","correct":"0"},{"ID":"4645","answer":"True","correct":"1"}]},{"question":"2. If central banks stopped paying a return to the private banks on the reserves they hold with the central bank then the private banks would have a greater incentive to advance credit to the private sector.","ID":"857","explanation":"","answers":[{"ID":"4648","answer":"False","correct":"1"},{"ID":"4647","answer":"True","correct":"0"}]},{"question":"3. Spain has reduced its budget deficit over the last 12 months through austerity. A declining deficit indicates that the government fiscal stance is becoming more contractionary.","ID":"858","explanation":"","answers":[{"ID":"4650","answer":"False","correct":"1"},{"ID":"4649","answer":"True","correct":"0"}]},{"question":"4. A central bank running a policy rate of near zero could always directly purchase Treasury debt to facilitate the governments budget deficit without compromising its monetary policy stance.","ID":"859","explanation":"","answers":[{"ID":"4654","answer":"False","correct":"1"},{"ID":"4653","answer":"True","correct":"0"}]},{"question":"5. Premium Question: The Eurozone countries will only start to reduce their public debt ratio when the respective governments succeed in running primary budget surpluses (that is, spending net of interest payments is less than taxation revenue).","ID":"860","explanation":"","answers":[{"ID":"4652","answer":"False","correct":"1"},{"ID":"4651","answer":"True","correct":"0"}]}]}, {"ID":"171","name":"Quiz 2012 - 26","added_on":"2012-06-28 16:09:39","questions":[{"question":"1. If the share in national income that workers receive (the wage share) falls then their real standard of living is reduced.","ID":"861","explanation":"","answers":[{"ID":"4666","answer":"False","correct":"1"},{"ID":"4665","answer":"True","correct":"0"}]},{"question":"2. If workers succeed in gaining real wages increases then, other things equal, the share of profits in national income is squeezed.","ID":"862","explanation":"","answers":[{"ID":"4668","answer":"False","correct":"1"},{"ID":"4667","answer":"True","correct":"0"}]},{"question":"3. Modern Monetary Theory (MMT) does not deny that government spending can crowd out private spending.","ID":"863","explanation":"","answers":[{"ID":"4674","answer":"False","correct":"0"},{"ID":"4673","answer":"True","correct":"1"}]},{"question":"4. The government has to issue debt if the central bank is targetting, say a 2 per cent short-term interest rate and declines to pay a return on excess bank reserves.","ID":"864","explanation":"","answers":[{"ID":"4672","answer":"False","correct":"0"},{"ID":"4671","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Suppose that the government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.","ID":"865","explanation":"","answers":[{"ID":"4670","answer":"False","correct":"0"},{"ID":"4669","answer":"True","correct":"1"}]}]}, {"ID":"172","name":"Quiz 2012 - 27","added_on":"2012-07-06 11:25:25","questions":[{"question":"1. Modern Monetary Theory (MMT) recognises that the unemployed live of the hard work of those that are employed.","ID":"866","explanation":"","answers":[{"ID":"4686","answer":"False","correct":"0"},{"ID":"4685","answer":"True","correct":"1"}]},{"question":"2. The automatic stabilisers operate in a counter-cyclical fashion and ensure that the government budget balance, which rises during a recession, returns to its appropriate level once growth returns to its long-term trend.","ID":"867","explanation":"","answers":[{"ID":"4688","answer":"False","correct":"1"},{"ID":"4687","answer":"True","correct":"0"}]},{"question":"3. The accumulated spending build-up of annual budget deficits does not pose an inflation threat.","ID":"868","explanation":"","answers":[{"ID":"4690","answer":"False","correct":"1"},{"ID":"4689","answer":"True","correct":"0"}]},{"question":"4. Which scenario represents a more expansionary outcome:nn(a) A budget deficit equivalent to 5 per cent of GDP (including the impact of automatic stabilisers equivalent to 3 per cent of GDP).nn(b) A budget deficit equivalent to 3 per cent of GDP.nn(c) You cannot tell because you do not know the decomposition between the cyclical and structural components in Option (b)n","ID":"869","explanation":"","answers":[{"ID":"4695","answer":"Option (a)","correct":"1"},{"ID":"4696","answer":"Option (b)","correct":"0"},{"ID":"4697","answer":"Option (c)","correct":"0"}]},{"question":"5. Premium Question: If private domestic investment is less than private domestic saving and the current account is draining aggregate demand then the government budget has to be in deficit no matter what level of GDP is produced.","ID":"870","explanation":"","answers":[{"ID":"4694","answer":"False","correct":"0"},{"ID":"4693","answer":"True ","correct":"1"}]}]}, {"ID":"173","name":"Quiz 2012 - 28","added_on":"2012-07-13 07:43:41","questions":[{"question":"1. The OECD reported this week that the wage share in national income has continued to fall in Australia during the crisis. This has arisen because the purchasing power equivalent of wages and salaries has failed to keep pace with the growth in labour productivity.","ID":"871","explanation":"","answers":[{"ID":"4709","answer":"False","correct":"0"},{"ID":"4708","answer":"True","correct":"1"}]},{"question":"2. The ratio of the broad measure of the money supply to the monetary base has fallen dramatically in many nations during the financial crisis which indicates that the money multiplier has fallen.","ID":"872","explanation":"","answers":[{"ID":"4711","answer":"False","correct":"1"},{"ID":"4710","answer":"True","correct":"0"}]},{"question":"3. If a government doesn"t raise tax revenue then it is unable to spend.","ID":"873","explanation":"","answers":[{"ID":"4713","answer":"False","correct":"0"},{"ID":"4712","answer":"True","correct":"1"}]},{"question":"4. At present, it appears that the automatic stabilizers are probably providing enough demand stimulus to maintain some growth in most economies. While the proportion of the budget balance that is working in this way is not directly observable, the estimates provided by institutions such as the OECD and the IMF are overly pessimistic.","ID":"874","explanation":"","answers":[{"ID":"4717","answer":"False","correct":"0"},{"ID":"4716","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Under current public sector debt-issuance arrangements (where sovereign governments match their deficits with issues of debt), the government and the private domestic sector cannot simultaneously spend less than they earn.","ID":"875","explanation":"","answers":[{"ID":"4715","answer":"False","correct":"1"},{"ID":"4714","answer":"True","correct":"0"}]}]}, {"ID":"174","name":"Quiz 2012 - 29","added_on":"2012-07-18 07:06:01","questions":[{"question":"1. The central bank sets the short-run interest rate and as part of its liquidity management functions can pay any rate on excess reserves held by the commercial banks that it chooses.","ID":"876","explanation":"","answers":[{"ID":"4729","answer":"False","correct":"1"},{"ID":"4728","answer":"True ","correct":"0"}]},{"question":"2. When a currency appreciates strongly against key trading partner currencies due to the strong demand for certain exports (say mining output), the result drop in international competitiveness squeezes export industries which are not enjoying a commensurate growth in world demand. Cutting domestic wages and the rate of inflation would restore competitiveness in the industries that are under pressure.","ID":"877","explanation":"","answers":[{"ID":"4731","answer":"False","correct":"1"},{"ID":"4730","answer":"True","correct":"0"}]},{"question":"3. Aggregate demand is the sum of all spending components (consumption, investment, government spending, and net exports). In a stock-flow consistent macroeconomics, we know that flows during a period add to relevant stocks. For example, if the flow of consumption spending rose by $200 billion in total in any one year, then if nothing else changes the stock of aggregate demand would rise by the same amount in the first instance (before the multiplier starts to work).","ID":"878","explanation":"","answers":[{"ID":"4739","answer":"False","correct":"1"},{"ID":"4738","answer":"True","correct":"0"}]},{"question":"4. Modern Monetary Theory (MMT) demonstrates that mass unemployment arises from deficient aggregate demand which calls for an increase in the budget deficit to correct the deficiency. This observation is at odds with a policy prescription which aims to cut real wages relative to productivity.","ID":"879","explanation":"","answers":[{"ID":"4737","answer":"False","correct":"1"},{"ID":"4736","answer":"True","correct":"0"}]},{"question":"5. Premium Question: If the nation is running a current account deficit of 2 per cent of GDP and the government runs a surplus equal to 2 per cent of GDP, then we know that at the current level of GDP, the private domestic sector is not saving.","ID":"880","explanation":"","answers":[{"ID":"4741","answer":"False","correct":"0"},{"ID":"4740","answer":"True","correct":"1"}]}]}, {"ID":"175","name":"Quiz 2012 - 30","added_on":"2012-07-27 08:57:13","questions":[{"question":"1. The money supply is often defined to be the sum of currency on issue and demand deposits held in banks. The value of money declines if the money supply rises.","ID":"881","explanation":"","answers":[{"ID":"4753","answer":"False","correct":"1"},{"ID":"4752","answer":"True","correct":"0"}]},{"question":"2. Economists note that the automatic stabilisers in the government"s budget increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the budget outcome to the business cycle would not be eliminated if the government followed a fiscal rule such that it had to balance its budget at all times.","ID":"882","explanation":"","answers":[{"ID":"4755","answer":"False","correct":"0"},{"ID":"4754","answer":"True","correct":"1"}]},{"question":"3. If the nation is running a current account deficit, then domestic households and firms and the government cannot simultaneously reduce their levels of indebtedness.","ID":"883","explanation":"","answers":[{"ID":"4757","answer":"False","correct":"0"},{"ID":"4756","answer":"True","correct":"1"}]},{"question":"4. One advantage of low inflation is that the central bank can better use balance sheet management techniques to control yields on public debt at certain targetted maturities.","ID":"884","explanation":"","answers":[{"ID":"4759","answer":"False","correct":"0"},{"ID":"4758","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Modern Monetary Theory (MMT) demonstrates that a currency-issuing government has no intrinsic financial constraint and any constraints that are observed in practice reflect voluntary decisions by government to restrict their options. It remains, however, that the inflation risk associated with government spending would be higher if such a government stopped issuing public debt to match its deficit spending.","ID":"885","explanation":"","answers":[{"ID":"4761","answer":"False","correct":"1"},{"ID":"4760","answer":"True","correct":"0"}]}]}, {"ID":"176","name":"Quiz 2012 - 31","added_on":"2012-08-03 14:10:42","questions":[{"question":"1. A program of fiscal austerity which yields a budget surplus will always undermine attempts by the private domestic sector to save overall when the nation"s exports are less than the sum of their imports and net income flows.","ID":"886","explanation":"","answers":[{"ID":"4773","answer":"False","correct":"0"},{"ID":"4772","answer":"True","correct":"1"}]},{"question":"2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP).","ID":"887","explanation":"","answers":[{"ID":"4774","answer":"A nation can run an external deficit and equal government surplus while the private domestic sector is saving overall.","correct":"0"},{"ID":"4775","answer":"A nation can run an external deficit and equal government surplus while the private domestic sector is dis-saving overall.","correct":"1"},{"ID":"4776","answer":"A nation can run an external deficit and a larger government surplus while the private domestic sector is saving overall.","correct":"0"},{"ID":"4777","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]},{"question":"3. The more funds that commercial banks have on account with the central bank the more they can lend to customers.n","ID":"888","explanation":"","answers":[{"ID":"4781","answer":"False","correct":"1"},{"ID":"4780","answer":"True","correct":"0"}]},{"question":"4. If governments sought funding from the central bank for their net spending (deficits) rather than private bond markets then the inflation risk of such spending would remain unchanged.","ID":"889","explanation":"","answers":[{"ID":"4783","answer":"False","correct":"0"},{"ID":"4782","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Modern Monetary Theory (MMT) considers that the public debt ratio is of no concern because economic growth will always bring it down after a recession.","ID":"890","explanation":"","answers":[{"ID":"4779","answer":"False","correct":"1"},{"ID":"4778","answer":"True","correct":"0"}]}]}, {"ID":"177","name":"Quiz 2012 - 32","added_on":"2012-08-09 18:12:34","questions":[{"question":"1. If the inflation rate is steady and the central bank maintains a constant nominal interest rate, then under current institutional arrangements where governments match deficit spending with debt issuance to the private sector, the public debt ratio will rise if the government deficit doubles (say, from 2 to 4 per cent of GDP).","ID":"891","explanation":"","answers":[{"ID":"4795","answer":"False","correct":"1"},{"ID":"4794","answer":"True","correct":"0"}]},{"question":"2. The neo-liberal era has been characterised by a declining wage share in national income in many nations. This means that the real living standards of worker"s has been systematically eroded in these nations.","ID":"892","explanation":"","answers":[{"ID":"4797","answer":"False","correct":"1"},{"ID":"4796","answer":"True","correct":"0"}]},{"question":"3. Real wages will rise if the rate of growth in nominal earnings outstrips the growth in labour productivity (output per unit of labour input).","ID":"893","explanation":"","answers":[{"ID":"4799","answer":"False","correct":"1"},{"ID":"4798","answer":"True","correct":"0"}]},{"question":"4. When a nation runs a budget surplus it indicates that the national government is trying to slow the economy down and contain inflation.","ID":"894","explanation":"","answers":[{"ID":"4801","answer":"False","correct":"1"},{"ID":"4800","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Suppose that the government announced as part of a fiscal austerity strategy that it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. In that situation we would not be able to conclude that the fiscal austerity plans would undermine growth if the net export projection was realised.","ID":"895","explanation":"","answers":[{"ID":"4803","answer":"False","correct":"0"},{"ID":"4802","answer":"True","correct":"1"}]}]}, {"ID":"178","name":"Quiz 2012 - 33","added_on":"2012-08-17 11:28:37","questions":[{"question":"1. A currency-issuing government can always ensure there is first-class services to meet the demands of an ageing population.","ID":"896","explanation":"","answers":[{"ID":"4815","answer":"False","correct":"1"},{"ID":"4814","answer":"True","correct":"0"}]},{"question":"2. The rate the central banks charge commercial banks for any reserves it provides to them is dependent on the target policy rate the central bank sets.","ID":"897","explanation":"","answers":[{"ID":"4817","answer":"False","correct":"0"},{"ID":"4816","answer":"True","correct":"1"}]},{"question":"3. Introducing a system of 100 per cent reserve requirements on the banks will restore the central bank"s capacity to control the money supply.","ID":"898","explanation":"","answers":[{"ID":"4819","answer":"False","correct":"1"},{"ID":"4818","answer":"True","correct":"0"}]},{"question":"4. For a nation running a small current account deficit (close to balance), the government budget will always be in deficit if the domestic private sector is spending less than it earns.","ID":"899","explanation":"","answers":[{"ID":"4821","answer":"False","correct":"0"},{"ID":"4820","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Ignoring laws to the contrary, a central bank currently targetting a 2 per cent short-term policy rate, cannot directly purchase treasury debt to facilitate the national governments budget deficit (that is, \\\"monetise the deficit\\\") and continue to maintain its policy rate at 2 per cent.","ID":"900","explanation":"","answers":[{"ID":"4823","answer":"False","correct":"1"},{"ID":"4822","answer":"True","correct":"0"}]}]}, {"ID":"179","name":"Quiz 2012 - 34","added_on":"2012-08-24 08:03:06","questions":[{"question":"1. Over a given business 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:n","ID":"901","explanation":"","answers":[{"ID":"4845","answer":"Surplus of 1 per cent of GDP","correct":"0"},{"ID":"4844","answer":"Deficit of 1 per cent of GDP","correct":"1"}]},{"question":"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.","ID":"902","explanation":"","answers":[{"ID":"4837","answer":"False","correct":"0"},{"ID":"4836","answer":"True","correct":"1"}]},{"question":"3. During a recession, if the government uses expansionary fiscal policy to restore trend real GDP growth it will restore full employment.","ID":"903","explanation":"","answers":[{"ID":"4839","answer":"False","correct":"1"},{"ID":"4838","answer":"True","correct":"0"}]},{"question":"4. At present, private domestic sectors around the world are locked in a process of deleveraging with private households increasing their saving ratios and firms are declining to invest. To avoid the employment losses arising from this lost private spending, governments need to expand public deficits.","ID":"904","explanation":"","answers":[{"ID":"4841","answer":"False","correct":"1"},{"ID":"4840","answer":"True","correct":"0"}]},{"question":"5. Premium Question: If the external sector is accumulating financial claims on the local economy (that is, providing foreign savings to the domestic economy) and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can run surpluses without damaging employment growth.","ID":"905","explanation":"","answers":[{"ID":"4843","answer":"False","correct":"1"},{"ID":"4842","answer":"True","correct":"0"}]}]}, {"ID":"180","name":"Quiz 2012 - 35","added_on":"2012-08-31 16:05:35","questions":[{"question":"1. As a matter of accounting, the financial assets held by the non-government sector rise $-for-$ when a sovereign government issues debt.","ID":"906","explanation":"","answers":[{"ID":"4857","answer":"False","correct":"1"},{"ID":"4856","answer":"True","correct":"0"}]},{"question":"2. If yields rise on new bond issues then deficit spending by a currency-issuing government becomes more expensive.","ID":"907","explanation":"","answers":[{"ID":"4859","answer":"False","correct":"1"},{"ID":"4858","answer":"True","correct":"0"}]},{"question":"3. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the domestic private sector cannot reduce its overall debt levels (by saving) without incurring employment losses.","ID":"908","explanation":"","answers":[{"ID":"4861","answer":"False","correct":"0"},{"ID":"4860","answer":"True","correct":"1"}]},{"question":"4. The imposition of fiscal rules which aim to limit the discretionary capacity of governments to net spend bias fiscal policy towards counter-cyclical responses when private spending is weak.","ID":"909","explanation":"","answers":[{"ID":"4863","answer":"False","correct":"1"},{"ID":"4862","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Open market operations as a means of ensuring that levels of bank reserves are consistent with the policy target become redundant if the central bank pays a positive interest rate on overnight reserves held by the commercial banks (ignore any reserve requirements in place when answering).","ID":"910","explanation":"","answers":[{"ID":"4865","answer":"False","correct":"1"},{"ID":"4864","answer":"True","correct":"0"}]}]}, {"ID":"181","name":"Quiz 2012 - 36","added_on":"2012-09-06 03:46:22","questions":[{"question":"1. The sectoral balances perspective of the national accounting framework tells us that the private domestic sector cannot save if a nation"s external sector is in balance and the government runs a balanced budget.","ID":"911","explanation":"","answers":[{"ID":"4877","answer":"False","correct":"1"},{"ID":"4876","answer":"True","correct":"0"}]},{"question":"2. Financial market commentators watch movements in UK and US bond yields as a guide to the state of confidence in the capacity of the respective governments to honour their liabilities. In this context, the commentators are correct when they conclude that rising yields on 10-year bond yields are a sign that bond markets are demanding increased risk premiums for these assets. ","ID":"912","explanation":"","answers":[{"ID":"4879","answer":"False","correct":"1"},{"ID":"4878","answer":"True","correct":"0"}]},{"question":"3. If a nation that is running an on-going external deficit is to avoid a recession, then the government spending (relative to taxation) has to rise if the household saving ratio rises.","ID":"913","explanation":"","answers":[{"ID":"4881","answer":"False","correct":"1"},{"ID":"4880","answer":"True","correct":"0"}]},{"question":"4. Modern Monetary Theory does not accept the mainstream macroeconomics proposition that continually expanding the money supply will be inflationary.","ID":"914","explanation":"","answers":[{"ID":"4883","answer":"False","correct":"0"},{"ID":"4882","answer":"True","correct":"1"}]},{"question":"5. Premium Question: While a currency-issuing government does not have to issue debt to match its deficit spending, it does reduce the inflation risk embodied in all spending when it issues debt and drains the purchasing power in the private sector to give itself more nominal spending space.","ID":"915","explanation":"","answers":[{"ID":"4885","answer":"False","correct":"1"},{"ID":"4884","answer":"True","correct":"0"}]}]}, {"ID":"182","name":"Quiz 2012 - 37","added_on":"2012-09-11 22:12:20","questions":[{"question":"1. National accounting rules dictate that a national government surplus equals a non-government deficit (and vice-versa). If a national government successfully achieves a budget surplus through an austerity program then the private domestic sector must be spending more than it is earning.","ID":"916","explanation":"","answers":[{"ID":"4909","answer":"False","correct":"1"},{"ID":"4908","answer":"True","correct":"0"}]},{"question":"2. If the stock of aggregate demand exceeds the capacity of the productive sector to respond by producing extra real goods and services then inflation is inevitable.","ID":"917","explanation":"","answers":[{"ID":"4911","answer":"False","correct":"1"},{"ID":"4910","answer":"True","correct":"0"}]},{"question":"3. If a nation is running a current account deficit and the private domestic sector is saving overall, then national income adjustments will ensure the government budget is in surplus.","ID":"918","explanation":"","answers":[{"ID":"4905","answer":"False","correct":"1"},{"ID":"4904","answer":"True","correct":"0"}]},{"question":"4. A central bank cannot simultaneously debt monetise a budget deficit (buy debt from the treasury) and maintain a positive short-term policy rate.","ID":"919","explanation":"","answers":[{"ID":"4913","answer":"False","correct":"1"},{"ID":"4912","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Assume that the government increases spending by $100 billion at the start of each year and maintains this policy for the next three years from now. Economists estimate the spending multiplier to be 2 and the impact is exhausted within each year (all induced consumption is completed within 12 months). The tax multiplier is estimated to be equal to 1 and the current average tax rate is equal to 25 per cent (so tax revenue rises by 25 cents for every extra dollar of GDP produced ). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"920","explanation":"","answers":[{"ID":"4903","answer":"$450 billion","correct":"0"},{"ID":"4902","answer":"$150 billion","correct":"0"},{"ID":"4901","answer":"$200 billion","correct":"0"},{"ID":"4900","answer":"$600 billion","correct":"1"}]}]}, {"ID":"183","name":"Quiz 2012 - 38","added_on":"2012-09-20 07:40:52","questions":[{"question":"1. If the national accounts of a nation reveal that its external surplus is equivalent to 2 per cent of GDP and the private domestic sector is saving overall 3 per cent of GDP then we would also observe:","ID":"921","explanation":"","answers":[{"ID":"4924","answer":"A budget deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"4925","answer":"A budget surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"4926","answer":"A budget deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"4927","answer":"A budget surplus equal to 5 per cent of GDP.","correct":"0"}]},{"question":"2. In a currency-issuing nation, real surpluses must be expropriated from productive workers to feed the unemployed.","ID":"922","explanation":"","answers":[{"ID":"4929","answer":"False","correct":"0"},{"ID":"4928","answer":"True","correct":"1"}]},{"question":"3. The British government"s budget deficit has been rising despite the Government"s stated fiscal austerity stance. We can conclude from the evidence at hand that the austerity mantra of the British government doesn"t correctly describe its fiscal policy stance.","ID":"923","explanation":"","answers":[{"ID":"4931","answer":"False","correct":"1"},{"ID":"4930","answer":"True","correct":"0"}]},{"question":"4. The impact on aggregate demand would be invariant between the government matching its deficit spending with private bond issues and the situation where the government instructed the central bank to buy its bonds to match the deficit. ","ID":"924","explanation":"","answers":[{"ID":"4933","answer":"False","correct":"0"},{"ID":"4932","answer":"True","correct":"1"}]},{"question":"5. Premium Question: In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 2 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 2 per cent (and this is the rate the government pays on all outstanding debt). The government"s budget balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 4 per cent. In Year 2, the government stimulates the economy and pushes the primary budget deficit out to 4 per cent of GDP in recognition of the severity of the recession. In doing so it stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. The central bank holds the nominal interest rate constant but inflation falls to 1 per cent given the slack nature of the economy the previous year. Under these circumstances, the public debt ratio falls even though the budget deficit has risen because of the real growth in the economy.","ID":"925","explanation":"","answers":[{"ID":"4935","answer":"False","correct":"1"},{"ID":"4934","answer":"True","correct":"0"}]}]}, {"ID":"184","name":"Quiz 2012 - 39","added_on":"2012-09-28 11:40:08","questions":[{"question":"1. Assume a nation is running an external surplus equivalent to 2 per cent of GDP and the government manages to run a budget surplus equivalent to 1 per cent of GDP. The national income changes associated with these balances would ensure that the private domestic sector was running an overall deficit of 1 per cent of GDP.","ID":"926","explanation":"","answers":[{"ID":"4947","answer":"False","correct":"1"},{"ID":"4946","answer":"True","correct":"0"}]},{"question":"2. Starting from the external situation in Question 1, with the surplus being the equivalent of 2 per cent of GDP but this time the budget surplus is currently 2 per cent of GDP. If the budget balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then you can conclude that national income also rises and the private surplus moves from minus 2 per cent of GDP to plus 2 per cent of GDP.","ID":"927","explanation":"","answers":[{"ID":"4949","answer":"False","correct":"1"},{"ID":"4948","answer":"True","correct":"0"}]},{"question":"3. If all bank loans had to be backed by reserves held at the bank (a 100 per cent reserve requirement) then the capacity of the banks to lend would be more constrained which would help maintain financial stability.","ID":"928","explanation":"","answers":[{"ID":"4951","answer":"False","correct":"1"},{"ID":"4950","answer":"True","correct":"0"}]},{"question":"4. A sovereign currency-issuing government needs to raise tax revenue to implement and provision its socio-economic agenda.","ID":"929","explanation":"","answers":[{"ID":"4953","answer":"False","correct":"0"},{"ID":"4952","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Assume a nation"s central bank successfully maintains a zero interest rate policy and recession keeps the inflation rate at zero. Under these circumstances a fiscal austerity program can achieve reductions in the public debt ratio even if the movements in the automatic stabilisers that result from the recession that the austerity causes tax revenue to decline.","ID":"930","explanation":"","answers":[{"ID":"4955","answer":"False","correct":"0"},{"ID":"4954","answer":"True","correct":"1"}]}]}, {"ID":"185","name":"Quiz 2012 - 40","added_on":"2012-10-05 09:03:50","questions":[{"question":"1. Although we know that a country is running a small current account deficit and that the private domestic sector is saving overall, we are unable to draw any conclusions about the state of the fiscal balance until we know the relative magnitudes of the other balances.n","ID":"931","explanation":"","answers":[{"ID":"4967","answer":"False","correct":"1"},{"ID":"4966","answer":"True","correct":"0"}]},{"question":"2. While a currency-issuing government does not have to issue bonds to match its deficit spending, one of the advantages of raising debt from the private sector is that it provides a boost to private wealth.","ID":"932","explanation":"","answers":[{"ID":"4971","answer":"False","correct":"1"},{"ID":"4970","answer":"True","correct":"0"}]},{"question":"3. Fiscal austerity aims to reduce the stock of net government spending by reducing spending and/or increasing taxes.","ID":"933","explanation":"","answers":[{"ID":"4969","answer":"False","correct":"1"},{"ID":"4968","answer":"True","correct":"0"}]},{"question":"4. When a government records a budget surplus which means it is withdrawing more purchasing power from the economy than it is adding, we know that it is seeking to attenuate the growth in aggregate demand.","ID":"934","explanation":"","answers":[{"ID":"4973","answer":"False","correct":"1"},{"ID":"4972","answer":"True","correct":"0"}]},{"question":"5. Premium Question: To reduce trade deficits, Eurozone nations are seeking to restore export competitiveness (within the Eurozone) by domestic deflation (reducing domestic wages and prices relative to other nations). Export competitiveness will rise if they are successful with this strategy.","ID":"935","explanation":"","answers":[{"ID":"4975","answer":"False","correct":"1"},{"ID":"4974","answer":"True","correct":"0"}]}]}, {"ID":"186","name":"Quiz 2012 - 41","added_on":"2012-10-12 08:55:20","questions":[{"question":"1. In the wake of a rising household saving ratio, a nation with an external deficit will move towards recession unless government net spending increases.","ID":"936","explanation":"","answers":[{"ID":"4989","answer":"False","correct":"1"},{"ID":"4988","answer":" True","correct":"0"}]},{"question":"2. The IMF recently downgraded their real GDP growth estimates. The US economy is now projected to grow in real terms by around 2.1 per cent in 2013. Real GDP per employed person is estimated to grow by 1.1 per cent over the same period and there is also the expectation that average weekly hours worked will remain more or less constant in 2013. Which of the following labour force growth rates would provide the basis for an expectation that the unemployment rate will be lower at the end of 2013 than at the beginning?","ID":"937","explanation":"","answers":[{"ID":"4991","answer":"2.1","correct":"0"},{"ID":"4990","answer":"3.2","correct":"0"},{"ID":"4992","answer":"0.9","correct":"1"},{"ID":"4993","answer":"Cannot tell because we don"t know what the participation rate is likely to be.","correct":"0"}]},{"question":"3. EMU member nations would eliminate their exposure to solvency risk if they exited the Eurozone and re-established their currency sovereignty - that is, issued their own floating currency.","ID":"938","explanation":"","answers":[{"ID":"4995","answer":"False","correct":"1"},{"ID":"4994","answer":"True","correct":"0"}]},{"question":"4. Economists use two multipliers to estimate the impact on GDP of an expansion in government spending associated with rising tax rates. The spending multiplier indicates the extent to which GDP rises as a result of the extra aggregate demand arising from the increased government spending. The tax multiplier indicates the impact of rising tax rates on GDP as labour supply is reduced because of the disincentives associated with taxation. The net effect on GDP is the sum of these two impacts. ","ID":"939","explanation":"","answers":[{"ID":"5003","answer":"False","correct":"1"},{"ID":"5002","answer":"True","correct":"0"}]},{"question":"5. Premium Question: The IMF recently admitted they had made serious errors in their modelling and grossly underestimated the size of spending multipliers. Economists use two multipliers to estimate the impact on GDP of an expansion in government spending associated with rising tax rates. The spending multiplier indicates the extent to which GDP rises as a result of the extra aggregate demand arising from the increased government spending. The tax multiplier indicates the impact of rising tax rates on GDP as labour supply is reduced because of the disincentives associated with taxation. The net effect on GDP is the sum of these two impacts. Assume that the government increases spending by $100 billion at the start of each year and maintains this policy for the next three years from now. Economists estimate the spending multiplier to be 1.5 and the impact is exhausted within each year (all induced consumption is completed within 12 months). The tax multiplier is estimated to be equal to 1 and the current tax rate is equal to 30 per cent (so tax revenue rises by 30 cents for every extra dollar of GDP produced ). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"940","explanation":"","answers":[{"ID":"4998","answer":"$135 billion","correct":"0"},{"ID":"4999","answer":"$150 billion","correct":"0"},{"ID":"5000","answer":"$315 billion","correct":"0"},{"ID":"5001","answer":"$450 billion","correct":"1"}]}]}, {"ID":"187","name":"Quiz 2012 - 42","added_on":"2012-10-19 11:16:44","questions":[{"question":"1. Modern Monetary Theory (MMT) characterises the interaction between the government sector (treasury and central bank) and the non-government sector in terms of vertical transactions, which change the net financial asset position of the non-government sector. These are in contrast with transactions within the non-government sector, which net to zero in terms of the impact on the financial asset position. Both quantitative easing (a central bank operation) and net public spending (a treasury operation) fit this depiction of vertical transactions.","ID":"941","explanation":"","answers":[{"ID":"5015","answer":"False","correct":"1"},{"ID":"5014","answer":"True","correct":"0"}]},{"question":"2. The real wage can only grow if the rate of growth in earnings outstrips labour productivity growth.","ID":"942","explanation":"","answers":[{"ID":"5017","answer":"False","correct":"0"},{"ID":"5016","answer":"True","correct":"1"}]},{"question":"3. A 3 per cent budget deficit to GDP ratio is more stimulatory than a 1 per cent deficit even if we do not know what the structural and cyclical break down of the aggregate figure is.","ID":"943","explanation":"","answers":[{"ID":"5019","answer":"False","correct":"0"},{"ID":"5018","answer":"True","correct":"1"}]},{"question":"4. Modern Monetary Theory (MMT) leads to the conclusion that a central bank could still increase interest rates even if the US government instructed it to directly purchase treasury debt to facilitate the national governments budget deficit rather than the treasury selling the debt into the private bond market.","ID":"944","explanation":"","answers":[{"ID":"5021","answer":"False","correct":"0"},{"ID":"5020","answer":"True","correct":"1"}]},{"question":"5. Premium Question: In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1.0 per cent. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The inflation rate is stable at 1 per cent per annum. The government"s primary budget balance records a deficit equivalent to 1 per cent of GDP and the public debt ratio rises by 3 per cent. In Year 2, the government pushes the primary budget deficit out to 2 per cent of GDP and in doing so stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio will rise but by an amount less than the rise in the budget deficit because of the real growth in the economy.","ID":"945","explanation":"","answers":[{"ID":"5023","answer":"False","correct":"1"},{"ID":"5022","answer":"True","correct":"0"}]}]}, {"ID":"188","name":"Quiz 2012 - 43","added_on":"2012-10-26 10:10:24","questions":[{"question":"1. If the government increases its budget deficit as a percentage of GDP it reduces the real resources (crowds out) available for private productive uses.","ID":"946","explanation":"","answers":[{"ID":"5035","answer":"False","correct":"0"},{"ID":"5034","answer":"True","correct":"1"}]},{"question":"2. For a nation running a current account deficit, the government budget will always be in deficit no matter what the government"s intentions are if the private domestic sector saves overall.","ID":"947","explanation":"","answers":[{"ID":"5037","answer":"False","correct":"0"},{"ID":"5036","answer":"True","correct":"1"}]},{"question":"3. Central banks manipulate bank reserves to control the policy target interest rate.","ID":"948","explanation":"","answers":[{"ID":"5039","answer":"False","correct":"0"},{"ID":"5038","answer":"True","correct":"1"}]},{"question":"4. If the central bank chooses to pay a return on overnight reserves held by the commercial banks equal to the current policy rate then the overall level of reserves held by the latter will be higher than otherwise (ignore any reserve requirements).","ID":"949","explanation":"","answers":[{"ID":"5041","answer":"False","correct":"0"},{"ID":"5040","answer":"True","correct":"1"}]},{"question":"5. Premium Question: It would be impossible for a government to avoid issuing debt to the private sector to match its budget deficit while the central bank was simultaneously targeting a positive short-term policy rate.","ID":"950","explanation":"","answers":[{"ID":"5043","answer":"False","correct":"1"},{"ID":"5042","answer":"True","correct":"0"}]}]}, {"ID":"189","name":"Quiz 2012 - 44","added_on":"2012-11-02 14:10:14","questions":[{"question":"1. Central banks provide reserves to the commercial banking system at some penalty rate. However, this compromises their capacity to control bank lending and target a given monetary policy rate.","ID":"951","explanation":"","answers":[{"ID":"5055","answer":"False","correct":"0"},{"ID":"5054","answer":"True","correct":"1"}]},{"question":"2. If inflation rate remained equal to the nominal interest rate, then the government deficit could double (from say 2 to 4 per cent of GDP) without pushing up public debt as a proportion of GDP.","ID":"952","explanation":"","answers":[{"ID":"5057","answer":"False","correct":"0"},{"ID":"5056","answer":"True","correct":"1"}]},{"question":"3. The Troika has placed a lot of reliance on nations such as Greece exporting their way out of crisis on the back of extensive cuts to domestic spending as they push their budgets into surplus. This strategy can only be associated with real economic growth if the private domestic sector spends more than it earns.n","ID":"953","explanation":"","answers":[{"ID":"5061","answer":"False","correct":"1"},{"ID":"5060","answer":"True","correct":"0"}]},{"question":"4. If the share of wages in national income falls then the workers" standard of living falls.","ID":"954","explanation":"","answers":[{"ID":"5059","answer":"False","correct":"1"},{"ID":"5058","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current interest rate target. If on average the government collects an income tax of 20 cents in the dollar, then total tax revenue will rise by 0.20 times $x if government spending increases (once and for all) by $X dollars and private investment and exports remain unchanged.","ID":"955","explanation":"","answers":[{"ID":"5063","answer":"False","correct":"1"},{"ID":"5062","answer":"True","correct":"0"}]}]}, {"ID":"190","name":"Quiz 2012 - 45","added_on":"2012-11-09 09:12:54","questions":[{"question":"1. Given the existence of a few nations that run large external surpluses, most nations run current account deficits. Under these conditions, the deficit nations operate within the constraint that national income movements will ensure that the two remaining sectors (government and private domestic) end up spending more than they receive, irrespective of the GDP growth rate.","ID":"956","explanation":"","answers":[{"ID":"5075","answer":"False","correct":"1"},{"ID":"5074","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) makes a crucial distinction between the issuer of the currency and the user of that currency. We learn that unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government debt, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"957","explanation":"","answers":[{"ID":"5077","answer":"False","correct":"1"},{"ID":"5076","answer":"True ","correct":"0"}]},{"question":"3. Standing facilities (credit lines etc) that central banks maintain means that the monetary supply is always responding to changes in the monetary base.","ID":"958","explanation":"","answers":[{"ID":"5079","answer":"False","correct":"1"},{"ID":"5078","answer":"True ","correct":"0"}]},{"question":"4. Over the last two decades, there have been major redistributions of national income towards profits in many nations. This has arisen because inflation has run faster than the growth in nominal wages leading to larger profit margins.","ID":"959","explanation":"","answers":[{"ID":"5081","answer":"False","correct":"1"},{"ID":"5080","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Modern Monetary Theory (MMT) recognises that political constraints that governments operate within often override the intrinsic capacities they have as currency issuers. Accordingly, it recognises there is a trade-off between the need to run budget surpluses to reduce the public debt ratio and the political problems that austerity brings.","ID":"960","explanation":"","answers":[{"ID":"5083","answer":"False","correct":"1"},{"ID":"5082","answer":"True","correct":"0"}]}]}, {"ID":"191","name":"Quiz 2012 - 46","added_on":"2012-11-16 08:52:06","questions":[{"question":"1. The idea that government spending crowds out private spending is found in both Modern Monetary Theory (MMT) and mainstream economic theory.","ID":"961","explanation":"","answers":[{"ID":"5103","answer":"False","correct":"0"},{"ID":"5102","answer":"True","correct":"1"}]},{"question":"2. National accounting shows us that a government surplus equals a non-government deficit. If the nation has an external deficit and if fiscal austerity ends up generating a budget surpluses, then the collective indebtedness of households and firms must be rising.","ID":"962","explanation":"","answers":[{"ID":"5095","answer":"False","correct":"0"},{"ID":"5094","answer":"True","correct":"1"}]},{"question":"3. The share of wages in national income has fallen in most nations over the last 30 years. In part, this led to economic growth becoming more dependent on credit to maintain growth in consumption spending and was a primary cause of the global financial crisis. To reduce this dependency, the wage share will have to rise. However, with fiscal austerity now targetting cuts in real wages, the necessary reversal in the wage share decline will be thwarted.","ID":"963","explanation":"","answers":[{"ID":"5097","answer":"False","correct":"1"},{"ID":"5096","answer":"True","correct":"0"}]},{"question":"4. Central banks in many nations moved from paying no return to commercial banks on overnight bank reserve balances to paying a positive interest return as the global financial crisis ensued. Previously, central banks had to conduct open market operations (sales and purchases of bonds) to provide (or deprive) the commercial banks of interest-bearing assets as a means of managing overnight liquidity (add or drain reserves) to ensure its policy rate was sustained. Ignoring any reserve requirements, the need to conduct these open market operations became redundant once they paid a positive return on overnight reserves. ","ID":"964","explanation":"","answers":[{"ID":"5099","answer":"False","correct":"1"},{"ID":"5098","answer":"True","correct":"0"}]},{"question":"5. Premium Question: The US Bureau of Labor Statistics just released the October 2012 Consumer Price Index data which showed a declining inflation rate in America. Mainstream economists have argued that the large scale quantitative easing conducted by central banks in recent years - so-called printing money - would be inflationary. They base their predictions on the Quantity Theory of Money which in common parlance is expressed as too much money chasing too few goods. The fact that inflation is in retreat in the US despite the Federal Reserve having engaged in large-scale quantitative easing programs refutes the mainstream economic theory of inflation. ","ID":"965","explanation":"","answers":[{"ID":"5101","answer":"False","correct":"1"},{"ID":"5100","answer":"True","correct":"0"}]}]}, {"ID":"192","name":"Quiz 2012 - 47","added_on":"2012-11-23 10:45:58","questions":[{"question":"1. A fiscal rule that forces governments to run budget surpluses each year would equally force the private sector to run deficits and accumulate increasing levels of indebtedness as a result.","ID":"966","explanation":"","answers":[{"ID":"5115","answer":"False","correct":"1"},{"ID":"5114","answer":"True","correct":"0"}]},{"question":"2. If a government is running an austerity program and learns that the estimated output gap was smaller than they originally thought, then other things equal, the governments discretionary fiscal austerity would have to be intensified to balance the structural budget. ","ID":"967","explanation":"","answers":[{"ID":"5117","answer":"False","correct":"0"},{"ID":"5116","answer":"True","correct":"1"}]},{"question":"3. When the private domestic sector decides to save more of its total income, the national government has to increase its net spending (deficit) to avoid output and employment losses.","ID":"968","explanation":"","answers":[{"ID":"5119","answer":"False","correct":"1"},{"ID":"5118","answer":"True","correct":"0"}]},{"question":"4 In a fixed coupon government bond auction, the higher is the demand for the bonds the lower the yields will be at that asset maturity which suggests that higher budget deficits will eventually drive short-term interest rates down.","ID":"969","explanation":"","answers":[{"ID":"5121","answer":"False","correct":"1"},{"ID":"5120","answer":"True","correct":"0"}]},{"question":"5. Premium Question: Opponents of continuous budget deficits often agree that a short-period of deficit spending when the private demand is weak is not likely to be inflationary. Their main concern is that it is the accumulated stock of spending associated with continuous budget deficits that eventually increases the risk of inflation. Their concern has validity because if nominal spending growth outstrips the capacity of the economy to respond in real terms, then inflation will be the result.","ID":"970","explanation":"","answers":[{"ID":"5123","answer":"False","correct":"1"},{"ID":"5122","answer":"True","correct":"0"}]}]}, {"ID":"193","name":"Quiz 2012 - 48","added_on":"2012-11-26 10:06:52","questions":[{"question":"1. At present all the Eurozone member nations face insolvency risk. If any one of them left the Eurozone and re-established its own currency, re-denominated all euro liabilities into their own currency, then they would eliminate that risk on all future liabilities.","ID":"971","explanation":"","answers":[{"ID":"5135","answer":"False","correct":"1"},{"ID":"5134","answer":"True","correct":"0"}]},{"question":"2. Nations that run large external surpluses can usually maintain economic growth and satisfy the desire of the private domestic sector to save overall while running budget surpluses. By accumulating those budget surpluses in a sovereign fund, the government can create more space for non-inflationary spending in the future once the resource wealth dissipates and the external sector moves into deficit.","ID":"972","explanation":"","answers":[{"ID":"5137","answer":"False","correct":"1"},{"ID":"5136","answer":"True","correct":"0"}]},{"question":"3. The estimates of structural budget deficits by multilateral agencies such as the IMF and the OECD, will usually lead one to conclude that a government"s discretionary fiscal position is more expansionary than it actually is.","ID":"973","explanation":"","answers":[{"ID":"5139","answer":"False","correct":"0"},{"ID":"5138","answer":"True","correct":"1"}]},{"question":"4. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"974","explanation":"","answers":[{"ID":"5140","answer":"A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"5141","answer":"A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"5142","answer":"A nation can run a current account deficit with a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"5143","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]},{"question":"5. Premium Question: Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP minus the changes in the monetary base arising from official foreign exchange transactions.","ID":"975","explanation":"","answers":[{"ID":"5145","answer":"False","correct":"1"},{"ID":"5144","answer":"True","correct":"0"}]}]}, {"ID":"194","name":"Quiz 2012 - 49","added_on":"2012-12-06 16:25:03","questions":[{"question":"1. A national government can run a balanced budget over the economic cycle (peak to peak) as long as it accepts that, after all the spending adjustments are exhausted, their strategy will ensure that households and firms overall spend more than they earn - that is, run down previous savings or accumulate more net debt.","ID":"976","explanation":"","answers":[{"ID":"5157","answer":"False","correct":"1"},{"ID":"5156","answer":"True","correct":"0"}]},{"question":"2. A basic understanding of Modern Monetary Theory (MMT) would argue that mass unemployment is due to a deficiency in aggregate demand which would then lead one to reject the conclusion that excessive real wage demands by workers can cause such unemployment. ","ID":"977","explanation":"","answers":[{"ID":"5159","answer":"False","correct":"1"},{"ID":"5158","answer":"True","correct":"0"}]},{"question":"3. Modern Monetary Theory (MMT) teaches us that a sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues:","ID":"978","explanation":"","answers":[{"ID":"5160","answer":"the less is the volume of investment funds in the non-government sector that can be used for other investments.","correct":"0"},{"ID":"5161","answer":"the greater is non-government wealth held in the form of public debt.","correct":"1"},{"ID":"5162","answer":"the more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"},{"ID":"5163","answer":"All of the above.","correct":"0"}]},{"question":"4. A budget surplus indicates that the national government is:","ID":"979","explanation":"","answers":[{"ID":"5164","answer":"trying to slow the economy down to contain inflation.","correct":"0"},{"ID":"5165","answer":"trying to reduce public debt.","correct":"0"},{"ID":"5166","answer":"you cannot conclude anything about the government"s policy intentions.","correct":"1"}]},{"question":"5. Premium Question: The Australian National Accounts data came out this week and the federal government maintained its assertion that the annualised growth rate revealed (3.1 per cent) was around the trend established over the last decade (3.2 per cent). They reaffirmed their policy aim, which is to keep real GDP growth at that trend rate. If labour productivity grows at 1.5 per cent per annum and the labour force grows at 2 per cent per annum and the average working week is constant in hours, then this policy (if successful) will see the unemployment rate rising.","ID":"980","explanation":"","answers":[{"ID":"5168","answer":"False","correct":"0"},{"ID":"5167","answer":"True","correct":"1"}]}]}, {"ID":"195","name":"Quiz 2012 - 50","added_on":"2012-12-14 14:19:56","questions":[{"question":"1. A program of fiscal austerity which drains aggregate demand growth may not undermine attempts by the private domestic sector to reduce its indebtedness.","ID":"981","explanation":"","answers":[{"ID":"5180","answer":"False","correct":"0"},{"ID":"5179","answer":"True","correct":"1"}]},{"question":"2. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.","ID":"982","explanation":"","answers":[{"ID":"5190","answer":"False","correct":"1"},{"ID":"5189","answer":"True","correct":"0"}]},{"question":"3. The money multiplier is in fact more correctly considered to be a divisor relating the monetary base to the money supply.","ID":"983","explanation":"","answers":[{"ID":"5184","answer":"False","correct":"0"},{"ID":"5183","answer":"True","correct":"1"}]},{"question":"4. A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","ID":"984","explanation":"","answers":[{"ID":"5186","answer":"False","correct":"0"},{"ID":"5185","answer":"True","correct":"1"}]},{"question":"5. Premium Question: Government deficit spending would have a greater expansionary impact on aggregate demand if the central bank bought the public debt to match the deficit instead of a situation where the government matches it deficit by issuing debt to the private sector.","ID":"985","explanation":"","answers":[{"ID":"5188","answer":"False","correct":"1"},{"ID":"5187","answer":"True","correct":"0"}]}]}, {"ID":"196","name":"Quiz 2012 - 51","added_on":"2012-12-18 08:49:13","questions":[{"question":"1. If there is more \\\"money\\\" in the economy its value declines.","ID":"986","explanation":"","answers":[{"ID":"5206","answer":"False","correct":"1"},{"ID":"5205","answer":"True","correct":"0"}]},{"question":"2. A public works program that employs workers to dig deep holes on one day and then fill them in again the next day has exactly the same impact on current economic growth ($-for-$) as a private firm investing in a new factory.","ID":"987","explanation":"","answers":[{"ID":"5208","answer":"False","correct":"0"},{"ID":"5207","answer":"True","correct":"1"}]},{"question":"3. Economists note that the automatic stabilisers in the government"s budget increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the budget outcome to the business cycle would be eliminated if the government followed a balanced budget fiscal rule.","ID":"988","explanation":"","answers":[{"ID":"5210","answer":"False","correct":"1"},{"ID":"5209","answer":"True","correct":"0"}]},{"question":"4. If a nation is enjoying an external deficit, then one other sector must be spending more than it is earning.","ID":"989","explanation":"","answers":[{"ID":"5212","answer":"False","correct":"0"},{"ID":"5211","answer":"True","correct":"1"}]},{"question":"5. Premium Question: It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.","ID":"990","explanation":"","answers":[{"ID":"5214","answer":"False","correct":"0"},{"ID":"5213","answer":"True","correct":"1"}]},{"question":"6. Special Xmas Holiday Question: Santa Claus and his elves are in danger of becoming environmental refugees because:","ID":"991","explanation":"","answers":[{"ID":"5215","answer":"the sea ice in the Arctic shrank a dramatic 18 per cent in the year to September 2012, accelerating a trend observed in recent years.","correct":"0"},{"ID":"5216","answer":"the National Oceanic and Atmospheric Administration (NOAA)"s Arctic Report Card predicts that the Arctic will be free of summer sea ice within 30 years.","correct":"0"},{"ID":"5217","answer":"as the sea melts the methane deposits around the shoreline will be released into the atmosphere further accelerating global warming.","correct":"0"},{"ID":"5218","answer":"there is no threat - I believe in Santa Claus and climate change is just a rumour spread by socialists.","correct":"1"}]}]}, {"ID":"197","name":"Quiz 2012 - 52","added_on":"2012-12-28 07:02:54","questions":[{"question":"1. 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.","ID":"992","explanation":"","answers":[{"ID":"5230","answer":"False","correct":"0"},{"ID":"5229","answer":"True","correct":"1"}]},{"question":"2. When the government matches its deficit with debt-issuance it changes the portfolio of wealth held in the non-government sector. The impact on purchasing power is equivalent to a leakage from the expenditure system (akin to taxation, saving or imports) which reduces the expansionary impact of the government deficit spending.","ID":"993","explanation":"","answers":[{"ID":"5232","answer":"False","correct":"1"},{"ID":"5231","answer":"True","correct":"0"}]},{"question":"3. A public employment guarantee program, which required workers to attend a government centre each day and do jigsaw puzzles, would have no impact on national income.n","ID":"994","explanation":"","answers":[{"ID":"5234","answer":"False","correct":"1"},{"ID":"5233","answer":"True","correct":"0"}]},{"question":"4. Which budget deficit outcome is the least expansionary?","ID":"995","explanation":"","answers":[{"ID":"5235","answer":"1 per cent of GDP","correct":"1"},{"ID":"5236","answer":"2 per cent of GDP","correct":"0"},{"ID":"5237","answer":"3 per cent of GDP","correct":"0"},{"ID":"5238","answer":"Cannot say because it depends on the decomposition of the structural and automatic stabiliser components.","correct":"0"}]},{"question":"5. Premium Question: If the government reduces its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"996","explanation":"","answers":[{"ID":"5240","answer":"False","correct":"1"},{"ID":"5239","answer":"True","correct":"0"}]}]}, {"ID":"198","name":"Quiz 2013 - 1","added_on":"2013-01-04 12:34:22","questions":[{"question":"1. The monetary base always adjusts to changes in the money supply rather than the other way around.","ID":"997","explanation":"","answers":[{"ID":"5248","answer":"False","correct":"0"},{"ID":"5247","answer":"True","correct":"1"}]},{"question":"2. The automatic stabilisers built into the government budget work counter-cyclically to ensure that the budget balance returns to its appropriate level after a cyclical disturbance.","ID":"998","explanation":"","answers":[{"ID":"5250","answer":"False","correct":"1"},{"ID":"5249","answer":"True","correct":"0"}]},{"question":"3. If the external sector was running a surplus equivalent to 4 per cent of GDP, and the sum of all the private sector spending plans indicated it was desiring to run a surplus overall equivalent to 6 per cent, then the government could safely plan on achieving a budget surplus of 2 per cent of GDP.","ID":"999","explanation":"","answers":[{"ID":"5252","answer":"False","correct":"1"},{"ID":"5251","answer":"True","correct":"0"}]}]}, {"ID":"199","name":"Quiz 2013 - 2","added_on":"2013-01-11 12:28:48","questions":[{"question":"1. It is common to use the term deleveraging to describe the reduction in indebtedness for a particular sector or group in the economy. In most nations at present, both the government and the private domestic sectors are carrying historically large debt ratios. However, under current public sector debt-issuance arrangements and given the national accounting relations, only one of these sectors can reduce its debt level at a time.","ID":"1000","explanation":"","answers":[{"ID":"5268","answer":"False","correct":"1"},{"ID":"5267","answer":"True","correct":"0"}]},{"question":"2. Workers can enjoy a stable share of GDP over time if they secure wage increases in line with the growth in their contribution to production.","ID":"1001","explanation":"","answers":[{"ID":"5266","answer":"False","correct":"1"},{"ID":"5265","answer":"True","correct":"0"}]},{"question":"3. The tax revenue a government receives importantly constrains the real spending capacity of a sovereign government.","ID":"1002","explanation":"","answers":[{"ID":"5264","answer":"False","correct":"0"},{"ID":"5263","answer":"True","correct":"1"}]}]}, {"ID":"200","name":"Quiz 2013 - 3","added_on":"2013-01-18 12:50:40","questions":[{"question":"1. In general, the estimates provided by the organisations such as the OECD and IMF of the impact of the automatic stabilisers are biased upwards.","ID":"1003","explanation":"","answers":[{"ID":"5276","answer":"False","correct":"1"},{"ID":"5275","answer":"True","correct":"0"}]},{"question":"2. If there is an external deficit, efforts by the private domestic sector to increase its overall saving as a percentage of GDP, will ensure the government budget is in deficit, irrespective of what the government desires.","ID":"1004","explanation":"","answers":[{"ID":"5280","answer":"False","correct":"0"},{"ID":"5279","answer":"True","correct":"1"}]},{"question":"3. When a government runs a continuous budget deficit public spending builds up over time.","ID":"1005","explanation":"","answers":[{"ID":"5282","answer":"False","correct":"1"},{"ID":"5281","answer":"True","correct":"0"}]}]}, {"ID":"201","name":"Quiz 2013 - 4","added_on":"2013-01-24 17:27:07","questions":[{"question":"1. Economists distinguish between the structural and the cyclical components of the budget outcome as a way of determining whether the fiscal policy stance of the government is expansionary, neutral or contractionary. In that context, which of the following situations represents the more expansionary outcome:","ID":"1006","explanation":"","answers":[{"ID":"5289","answer":"A budget deficit equivalent to 5 per cent of GDP","correct":"1"},{"ID":"5290","answer":"A budget deficit equivalent to 3 per cent of GDP","correct":"0"},{"ID":"5291","answer":"You cannot tell because you do not know the decomposition between the cyclical and structural components.","correct":"0"}]},{"question":"2. If private domestic investment is greater than private domestic saving and the current account is draining aggregate demand then the government budget has to be in deficit no matter what level of GDP is produced.","ID":"1007","explanation":"","answers":[{"ID":"5293","answer":"False","correct":"1"},{"ID":"5292","answer":"True","correct":"0"}]},{"question":"3. A central bank running a policy rate of near zero could always directly purchase Treasury debt to facilitate the governments budget deficit without compromising its monetary policy stance.","ID":"1008","explanation":"","answers":[{"ID":"5295","answer":"False","correct":"1"},{"ID":"5294","answer":"True","correct":"0"}]}]}, {"ID":"202","name":"Quiz 2013 - 5","added_on":"2013-02-01 11:44:01","questions":[{"question":"1. The automatic stabilisers always support growth when the economic growth is slowing.","ID":"1009","explanation":"","answers":[{"ID":"5303","answer":"False","correct":"0"},{"ID":"5302","answer":"True","correct":"1"}]},{"question":"2. Continuous budget deficits are more likely to present an inflation risk than one-off deficits designed to meet a short-term private spending decline. ","ID":"1010","explanation":"","answers":[{"ID":"5305","answer":"False","correct":"1"},{"ID":"5304","answer":"True","correct":"0"}]},{"question":"3. To maintain financial stability, the monetary base has to be driven by changes in the money supply.","ID":"1011","explanation":"","answers":[{"ID":"5307","answer":"False","correct":"0"},{"ID":"5306","answer":"True","correct":"1"}]}]}, {"ID":"203","name":"Quiz 2013 - 6","added_on":"2013-02-06 09:20:05","questions":[{"question":"1. National accounting shows us that a government surplus equals a non-government deficit. So if the imposition of fiscal austerity ends up generating a budget surpluses then the national income movements will force households and firms overall to be running deficits.","ID":"1012","explanation":"","answers":[{"ID":"5315","answer":"False","correct":"1"},{"ID":"5314","answer":"True","correct":"0"}]},{"question":"2. A characteristic feature of the neo-liberal period has been the declining share of wages in national income in most nations, which in part, meant that economic growth became more dependent on credit to maintain growth in consumption spending. However it is not necessary for real wages to grow in the coming years to reverse that trend and real wage cuts under austerity programs could result in an increase the wage share.","ID":"1013","explanation":"","answers":[{"ID":"5317","answer":"False","correct":"0"},{"ID":"5316","answer":"True","correct":"1"}]},{"question":"3. The payment of a positive interest return by the central bank on overnight bank reserves does not eliminate the need for it to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements). ","ID":"1014","explanation":"","answers":[{"ID":"5319","answer":"False","correct":"0"},{"ID":"5318","answer":"True","correct":"1"}]}]}, {"ID":"204","name":"Quiz 2013 - 7","added_on":"2013-02-15 12:35:33","questions":[{"question":"1. Unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government debt, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"1015","explanation":"","answers":[{"ID":"5327","answer":"False","correct":"1"},{"ID":"5326","answer":"True","correct":"0"}]},{"question":"2. Standing facilities that central banks maintain means that the monetary base always adjusts to the changes in the money supply.","ID":"1016","explanation":"","answers":[{"ID":"5329","answer":"False","correct":"0"},{"ID":"5328","answer":"True","correct":"1"}]},{"question":"3. Assume that the current account deficit of a nation is stable and equal to 2 per cent of GDP throughout a complete business cycle. The government is imposing fiscal austerity and at a particular point over that cycle we observe a government surplus equal to 3 per cent of GDP but which over the complete business cycle will end up being balanced. We also would know two things about the private domestic sector balance - at the observation point and on average over the cycle. It would be in:","ID":"1017","explanation":"","answers":[{"ID":"5337","answer":"(d) deficit by 1 per cent of GDP but on average over the cycle in deficit equal to 2 per cent of GDP.","correct":"0"},{"ID":"5336","answer":"(c) deficit by 1 per cent of GDP but on average over the cycle in surplus equal to 2 per cent of GDP.","correct":"0"},{"ID":"5335","answer":"(b) deficit by 5 per cent of GDP but on average over the cycle in deficit equal to 2 per cent of GDP.","correct":"1"},{"ID":"5334","answer":"(a) deficit by 5 per cent of GDP but on average over the cycle in surplus equal to 2 per cent of GDP.","correct":"0"}]}]}, {"ID":"205","name":"Quiz 2013 - 8","added_on":"2013-02-22 08:12:37","questions":[{"question":"1. A currency-issuing government can always ensure there is first-class services to meet the demands of an ageing population.","ID":"1018","explanation":"","answers":[{"ID":"5338","answer":"True","correct":"0"},{"ID":"5339","answer":"False","correct":"1"}]},{"question":"2. For a nation running a small current account deficit (close to balance), the government budget will always be in deficit if the domestic private sector is spending less than it earns.","ID":"1019","explanation":"","answers":[{"ID":"5345","answer":"False","correct":"0"},{"ID":"5344","answer":"True","correct":"1"}]},{"question":"3. Ignoring laws to the contrary, a central bank currently targetting a 2 per cent short-term policy rate, cannot directly purchase treasury debt to facilitate the national governments budget deficit (that is, \\\"monetise the deficit\\\") and continue to maintain its policy rate at 2 per cent.","ID":"1020","explanation":"","answers":[{"ID":"5346","answer":"True","correct":"0"},{"ID":"5347","answer":"False","correct":"1"}]}]}, {"ID":"206","name":"Quiz 2013 - 9","added_on":"2013-03-01 13:43:35","questions":[{"question":"1. An advantage of budget deficits is that the non-government sector becomes wealthier when a sovereign government issues debt that is purchased by private wealth holders.","ID":"1021","explanation":"","answers":[{"ID":"5355","answer":"False","correct":"1"},{"ID":"5354","answer":"True","correct":"0"}]},{"question":"2. In a fixed coupon government bond auction, the higher is the demand for the bonds the lower the yields will be at that asset maturity which suggests that higher budget deficits will eventually drive short-term interest rates down.","ID":"1022","explanation":"","answers":[{"ID":"5357","answer":"False","correct":"1"},{"ID":"5356","answer":"True","correct":"0"}]},{"question":"3. In a situation where the private domestic sector decides to lift its saving ratio, the economy can still grow even if the national government had decided to impose fiscal austerity.","ID":"1023","explanation":"","answers":[{"ID":"5359","answer":"False","correct":"0"},{"ID":"5358","answer":"True","correct":"1"}]}]}, {"ID":"207","name":"Quiz 2013 - 10","added_on":"2013-03-08 11:47:19","questions":[{"question":"1. One advantage of low inflation is that the central bank can better use balance sheet management techniques to control yields on public debt at certain targetted maturities.","ID":"1024","explanation":"","answers":[{"ID":"5379","answer":"False","correct":"0"},{"ID":"5378","answer":"True","correct":"1"}]},{"question":"2. Modern Monetary Theory (MMT) demonstrates that a currency-issuing government has no intrinsic financial constraint and any constraints that are observed in practice reflect voluntary decisions by government to restrict their options. It remains, however, that the inflation risk associated with government spending would be higher if such a government stopped issuing public debt to match its deficit spending.","ID":"1025","explanation":"","answers":[{"ID":"5381","answer":"False","correct":"1"},{"ID":"5380","answer":"True","correct":"0"}]},{"question":"3. Adopting a fiscal rule that requires the government maintain an average budget balance over the course of each business cycle would mean its overall budget outcome would be insulated from the impacts of the automatic stabilisers.","ID":"1026","explanation":"","answers":[{"ID":"5377","answer":"False","correct":"1"},{"ID":"5376","answer":" True","correct":"0"}]}]}, {"ID":"208","name":"Quiz 2013 - 11","added_on":"2013-03-14 18:52:23","questions":[{"question":"The accumulated stock of government spending associated with continuous budget deficits can increase the risk of inflation faced by an economy.","ID":"1027","explanation":"","answers":[{"ID":"5382","answer":"True","correct":"0"},{"ID":"5383","answer":"False","correct":"1"}]},{"question":"If a nation was running a current account deficit and a budget surplus equal to 2 per cent of GDP, we would always observe that the private domestic sector was spending more than it is earning.","ID":"1028","explanation":"","answers":[{"ID":"5384","answer":"True","correct":"1"},{"ID":"5385","answer":"False","correct":"0"}]},{"question":"When the government issues debt to match its budget deficit $-for-$ (or whatever currency unit is relevant) it also increases the net worth of the non-government sector.","ID":"1029","explanation":"","answers":[{"ID":"5386","answer":"True","correct":"0"},{"ID":"5387","answer":"False","correct":"1"}]}]}, {"ID":"209","name":"Quiz 2013 - 12","added_on":"2013-03-21 18:32:33","questions":[{"question":"1. Take an economy that is running a current account deficit equivalent to 2 per cent of its GDP with a government recording a budget surplus of 2 per cent of GDP. If the budget balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then you can conclude that national income also rises and the private domestic sector switches from a position where it is spending more than it is earning (deficit equivalent to 2 per cent of GDP) to a position where it is saving overall by 2 per cent of GDP.","ID":"1030","explanation":"","answers":[{"ID":"5399","answer":"False","correct":"1"},{"ID":"5398","answer":"True","correct":"0"}]},{"question":"2. When a government records a budget surplus which means it is withdrawing more purchasing power from the economy than it is adding, we know that it is seeking to attenuate the growth in aggregate demand.","ID":"1031","explanation":"","answers":[{"ID":"5397","answer":"False","correct":"1"},{"ID":"5396","answer":"True","correct":"0"}]},{"question":"3. Although we know that a country is running a small current account deficit and that the private domestic sector is saving overall, we are unable to draw any conclusions about the state of the fiscal balance until we know the relative magnitudes of the other balances. ","ID":"1032","explanation":"","answers":[{"ID":"5401","answer":"False","correct":"1"},{"ID":"5400","answer":"True","correct":"0"}]}]}, {"ID":"210","name":"Quiz 2013 - 13","added_on":"2013-03-29 18:21:46","questions":[{"question":"1. The larger the balances that the commercial banks have on account with the central bank the more they can lend to customers","ID":"1033","explanation":"","answers":[{"ID":"5409","answer":"False","correct":"1"},{"ID":"5408","answer":"True","correct":"0"}]},{"question":"2. The inflation risk of government deficit spending is invariant between matching the change in net spending with funds provided by the central bank or issuing debt to the private bond markets.","ID":"1034","explanation":"","answers":[{"ID":"5411","answer":"False","correct":"0"},{"ID":"5410","answer":"True","correct":"1"}]},{"question":"3. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP).","ID":"1035","explanation":"","answers":[{"ID":"5412","answer":"A nation can run an external deficit and equal government surplus while the private domestic sector is saving overall.","correct":"0"},{"ID":"5413","answer":"A nation can run an external deficit and equal government surplus while the private domestic sector is dis-saving overall.","correct":"1"},{"ID":"5414","answer":"A nation can run an external deficit and a larger government surplus while the private domestic sector is saving overall.","correct":"0"},{"ID":"5415","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]}]}, {"ID":"211","name":"Quiz 2013 - 14","added_on":"2013-04-05 14:53:30","questions":[{"question":"1. Modern Monetary Theory (MMT) indicates that a nation can fall into mass unemployment if real wages growth is rapid.","ID":"1036","explanation":"","answers":[{"ID":"5416","answer":"True","correct":"1"},{"ID":"5417","answer":"False","correct":"0"}]},{"question":"2. The private domestic sector will typically be in deficit when a sovereign national government runs a balanced budget over the business cycle (peak to peak) and the nation runs an external deficit over the same cycle.","ID":"1037","explanation":"","answers":[{"ID":"5421","answer":"False","correct":"1"},{"ID":"5420","answer":"True","correct":"0"}]},{"question":"3. Under a fiat monetary system, the absence of currency convertibility means:","ID":"1038","explanation":"","answers":[{"ID":"5422","answer":"(a) there is no reason for people to hold currency as a hedge against gold price falls. ","correct":"0"},{"ID":"5423","answer":"(b) by imposing a fine on anyone who has a red car, the government can motivate red car owners to offer goods and services in return for public spending.","correct":"1"},{"ID":"5424","answer":"(c) the currency becomes convertible into government bonds rather than gold.","correct":"0"}]}]}, {"ID":"212","name":"Quiz 2013 - 15","added_on":"2013-04-12 06:33:35","questions":[{"question":"1. The distribution of national income has shifted in most advanced nations over the last two decades in favour of profits and has forced workers to increase their debt levels to maintain consumption growth. This trend will only be reversed if workers can secure higher wages each year in line with the growth of labour productivity.","ID":"1039","explanation":"","answers":[{"ID":"5432","answer":"False","correct":"1"},{"ID":"5431","answer":"True","correct":"0"}]},{"question":"2. Under current arrangements, where sovereign governments match their deficits with issues of debt to the private sector, it is possible for the government and the private domestic sectors to simultaneously run surpluses.","ID":"1040","explanation":"","answers":[{"ID":"5434","answer":"False","correct":"0"},{"ID":"5433","answer":"True","correct":"1"}]},{"question":"3. A currency-issuing sovereign government can always provide first-class health care to its ageing citizens if it has the political will.","ID":"1041","explanation":"","answers":[{"ID":"5436","answer":"False","correct":"1"},{"ID":"5435","answer":"True","correct":"0"}]}]}, {"ID":"213","name":"Quiz 2013 - 16","added_on":"2013-04-19 16:01:01","questions":[{"question":"1. If the household saving ratio rises, then a nation with an external deficit will move towards recession unless government net spending offsets the contraction in demand.","ID":"1042","explanation":"","answers":[{"ID":"5444","answer":"False","correct":"1"},{"ID":"5443","answer":"True","correct":"0"}]},{"question":"2. The IMF recently downgraded their real GDP growth estimates. Taking the example of the Spain, it is now projected to contract in real terms by around 1.6 per cent in 2013 rather than 1.7 per cent as previously forecast. Real GDP per employed person is estimated to fall by about 0.9 per cent over the same period and the labour force is contracting slightly by about 0.1 per cent per annum. If average weekly hours worked will remain more or less constant in 2013, these projections would suggest that the unemployment rate will rise in 2013 by:","ID":"1043","explanation":"","answers":[{"ID":"5445","answer":" 2.6 per cent","correct":"0"},{"ID":"5446","answer":"0.6 per cent","correct":"1"},{"ID":"5447","answer":"0.8 per cent","correct":"0"},{"ID":"5448","answer":"Cannot tell because we don"t know what the participation rate is likely to be.","correct":"0"}]},{"question":"3. The Euro member nations would eliminate their exposure to solvency risk if they exited the Eurozone and issued their own floating currency.","ID":"1044","explanation":"","answers":[{"ID":"5450","answer":"False","correct":"1"},{"ID":"5449","answer":"True","correct":"0"}]}]}, {"ID":"214","name":"Quiz 2013 - 17","added_on":"2013-04-26 08:21:42","questions":[{"question":"1. When a nation is enjoying a strong terms of trade with an external surplus, the government can create more space for non-inflationary spending in the future by running budget surpluses and accumulating them in a sovereign fund.","ID":"1045","explanation":"","answers":[{"ID":"5458","answer":"False","correct":"1"},{"ID":"5457","answer":"True","correct":"0"}]},{"question":"2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP). A nation can run a current account deficit accompanied by a government sector surplus:nnnnn","ID":"1046","explanation":"","answers":[{"ID":"5459","answer":"of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"5460","answer":"of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"5461","answer":"that is a larger proportion of GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"5462","answer":"None of the above are possible as they all defy the sectoral balances accounting identity. ","correct":"0"}]},{"question":"3. Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP plus the changes in the monetary base arising from official foreign exchange transactions.","ID":"1047","explanation":"","answers":[{"ID":"5464","answer":"False","correct":"1"},{"ID":"5463","answer":"True","correct":"0"}]}]}, {"ID":"215","name":"Quiz 2013 - 18","added_on":"2013-05-03 07:21:24","questions":[{"question":"1. When economic growth resumes, the automatic stabilisers work in a counter-cyclical fashion to ensure that the government budget balance returns to its appropriate level.","ID":"1048","explanation":"","answers":[{"ID":"5472","answer":"False","correct":"1"},{"ID":"5471","answer":"True","correct":"0"}]},{"question":"2. The Modern Monetary Theory (MMT) analysis of central bank liquidity management operations tells us that if such a bank was targeting a 4 per cent policy rate, it would still be able to directly purchase all the Treasury debt that might be issued to match a national government"s budget deficit without compromising that monetary policy stance.n","ID":"1049","explanation":"","answers":[{"ID":"5474","answer":"False","correct":"0"},{"ID":"5473","answer":"True","correct":"1"}]},{"question":"3. When a sovereign government issues debt to match its net spending (budget deficit) it logically:","ID":"1050","explanation":"","answers":[{"ID":"5475","answer":"increases the financial assets that are held by the non-government sector $-for-$.","correct":"0"},{"ID":"5476","answer":"has no impact on the overall holdings of financial assets held by the non-government sector $-for-$.","correct":"1"},{"ID":"5477","answer":"reduces the capacity of the overall private sector to borrow from banks because it drains the deposits in the banking system to buy the bonds.","correct":"0"}]}]}, {"ID":"216","name":"Quiz 2013 - 19","added_on":"2013-05-10 09:36:04","questions":[{"question":"1. The crucial difference between a monetary system based on the convertible currency (gold standard) model and a fiat currency monetary is that under the former system:","ID":"1051","explanation":"","answers":[{"ID":"5478","answer":"Excessive national government spending led to inflation.","correct":"0"},{"ID":"5479","answer":"The national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"5480","answer":"The national government could not use net spending to achieve full employment.","correct":"0"}]},{"question":"1. Bank reserves are maintained to ensure that all the cheques written every day clear when presented. If a bank doesn"t have enough reserves then cheques drawn against it will bounce.","ID":"1052","explanation":"","answers":[{"ID":"5481","answer":"True","correct":"0"},{"ID":"5482","answer":"False","correct":"1"},{"ID":"5483","answer":" ","correct":"0"}]},{"question":"3. Assume inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting. Iff government spending increases by $X dollars and private investment and exports are unchanged then nominal income will continue growing until the sum of the changes in taxation revenue, import spending and household saving equals $X dollars.","ID":"1053","explanation":"","answers":[{"ID":"5484","answer":"True","correct":"1"},{"ID":"5485","answer":"False","correct":"0"}]}]}, {"ID":"217","name":"Quiz 2013 - 20","added_on":"2013-05-17 08:09:29","questions":[{"question":"1. When an external deficit and public deficit coincide, there must be a private sector deficit. This suggests that governments can only run budget deficits safely to support a private sector surplus, when net exports are strong.","ID":"1054","explanation":"","answers":[{"ID":"5493","answer":"False","correct":"1"},{"ID":"5492","answer":"True","correct":"0"}]},{"question":"2. When the private domestic sector decides to lift its saving ratio we cannot conclude that the national government has to increase its net spending (deficit) to avoid employment losses.","ID":"1055","explanation":"","answers":[{"ID":"5495","answer":"False","correct":"0"},{"ID":"5494","answer":"True","correct":"1"}]},{"question":"3. When the government pays back funds that is has borrowed from the non-government sector the payments may:","ID":"1056","explanation":"","answers":[{"ID":"5496","answer":"be inflationary if the economy is growing strongly when the bonds mature and there is too much money floating about.","correct":"0"},{"ID":"5497","answer":"be inflationary if the government payments to bond holders at maturity add more to nominal aggregate demand than the real economy can support given other policy settings.","correct":"1"},{"ID":"5498","answer":"not be inflationary because the sovereign government just has to credit the bank accounts of those who hold the bonds to repay them.","correct":"0"}]}]}, {"ID":"218","name":"Quiz 2013 - 21","added_on":"2013-05-24 07:42:43","questions":[{"question":"1. The government can run budget surpluses and still satisfy the private domestic sector desire to save overall as long as the external sector is in surplus.","ID":"1057","explanation":"","answers":[{"ID":"5506","answer":"False","correct":"1"},{"ID":"5505","answer":"True","correct":"0"}]},{"question":"2. Central bankers are talking about the possible need for more quantitative easing to ease the aggregate demand losses associated with the implementation of fiscal austerity programs. However QE cannot be compared to a net fiscal injection because it creates no new net financial assets in the currency of issue.","ID":"1058","explanation":"","answers":[{"ID":"5510","answer":"False","correct":"0"},{"ID":"5509","answer":"True","correct":"1"}]},{"question":"3. The expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance because then excess reserves are drained and the purchasing power is taken out of the monetary system.","ID":"1059","explanation":"","answers":[{"ID":"5512","answer":"False","correct":"1"},{"ID":"5511","answer":"True","correct":"0"}]}]}, {"ID":"219","name":"Quiz 2013 - 22","added_on":"2013-05-30 20:55:15","questions":[{"question":"1. The National Accounting framework says that total spending is the sum of household consumption, private investment, government spending and net exports. To understand this in terms of a stock-flow consistent macroeconomics, where we have to always trace the impact of flows during a period on the relevant stocks at the end of the period, we would interpret the spending components as flows adding to the stock of aggregate demand which in turn impacts on the final production (Gross Domestic Product).","ID":"1060","explanation":"","answers":[{"ID":"5520","answer":"False","correct":"1"},{"ID":"5519","answer":"True","correct":"0"}]},{"question":"2. The imposition of positive minimum reserve requirements on the private banks by the central bank, will have no constraining influence on the credit creation activities of the private banks relative to a system where there are no requirements other than the rule that reserve balances have to be positive.","ID":"1061","explanation":"","answers":[{"ID":"5522","answer":"False","correct":"0"},{"ID":"5521","answer":"True","correct":"1"}]},{"question":"3. If the external sector is in deficit overall and GDP growth rate is faster than the real interest rate, then:","ID":"1062","explanation":"","answers":[{"ID":"5523","answer":"Both the private domestic sector and the government sector overall can pay down their respective debt liabilities.","correct":"0"},{"ID":"5524","answer":"Either the private domestic sector or the government sector overall can pay down their debt liabilities.","correct":"1"},{"ID":"5525","answer":"Neither the private domestic sector or the government sector overall can pay down their debt liabilities.","correct":"0"}]}]}, {"ID":"220","name":"Quiz 2013 - 23","added_on":"2013-06-07 10:54:42","questions":[{"question":"1. Modern Monetary Theory (MMT) consider the transactions conducted by the government sector (treasury and central bank) with the non-government sector to be vertical transactions, which change the net financial asset position of the non-government sector. However, quantitative easing (a central bank transaction) is not considered to be a vertical transaction.","ID":"1063","explanation":"","answers":[{"ID":"5533","answer":"False","correct":"0"},{"ID":"5532","answer":"True","correct":"1"}]},{"question":"2. Modern Monetary Theory (MMT) leads to the conclusion that a central bank could still increase interest rates even if the US government instructed it to directly purchase treasury debt to facilitate the national governments budget deficit rather than the treasury selling the debt into the private bond market","ID":"1064","explanation":"","answers":[{"ID":"5535","answer":"False","correct":"0"},{"ID":"5534","answer":"True","correct":"1"}]},{"question":"3. A larger budget deficit is more stimulatory than a smaller deficit even if the difference between the two is purely accounted for by the automatic stabiliser component.","ID":"1065","explanation":"","answers":[{"ID":"5537","answer":"False","correct":"0"},{"ID":"5536","answer":"True","correct":"1"}]}]}, {"ID":"221","name":"Quiz 2013 - 24","added_on":"2013-06-14 06:59:03","questions":[{"question":"1. We are told that a country is running a very small external deficit and that the private domestic sector is spending less overall than it is earning but relative to GDP this balance is smaller than the external deficit. Without knowing the relative magnitudes of these balances, we cannot conclusively determine whether the government is in deficit or surplus.","ID":"1066","explanation":"","answers":[{"ID":"5545","answer":"False","correct":"1"},{"ID":"5544","answer":"True","correct":"0"}]},{"question":"2. Government bonds constitute a form of wealth held by the non-government sector. But it remains that overall non-government sector wealth does not rise if the government issues bonds to match its deficit spending as against the central bank just buying the bonds and crediting bank accounts.","ID":"1067","explanation":"","answers":[{"ID":"5547","answer":"False","correct":"0"},{"ID":"5546","answer":"True","correct":"1"}]},{"question":"3. When a government records a budget surplus which means it is withdrawing more purchasing power from the economy than it is adding, we know that it is seeking to attenuate the growth in aggregate demand to avoid the risk of inflation.","ID":"1068","explanation":"","answers":[{"ID":"5549","answer":"False","correct":"1"},{"ID":"5548","answer":"True","correct":"0"}]}]}, {"ID":"222","name":"Quiz 2013 - 25","added_on":"2013-06-21 09:34:22","questions":[{"question":"1. If workers (on average across the economy) suffer real wage losses because their nominal wages fail to keep pace with the inflation rate then a greater share of national income is going to profits.","ID":"1069","explanation":"","answers":[{"ID":"5557","answer":"False","correct":"1"},{"ID":"5556","answer":"True","correct":"0"}]},{"question":"2. The wider the spread between the price the central bank sets on the reserves it provides the commercial banks on demand (so-called penalty rates) and the target policy rate the more difficult it becomes for the central bank to ensure the quantity of reserves is appropriate for maintaining its target policy rate.","ID":"1070","explanation":"","answers":[{"ID":"5559","answer":"False","correct":"0"},{"ID":"5558","answer":"True","correct":"1"}]},{"question":"3. Assume that a national is continuously running an external surplus of 1 per cent of GDP. This surplus provides the scope for the government to run a equivalent surplus and still satisfy a desire by the private domestic to save overall.","ID":"1071","explanation":"","answers":[{"ID":"5561","answer":"False","correct":"1"},{"ID":"5560","answer":"True","correct":"0"}]}]}, {"ID":"223","name":"Quiz 2013 - 26","added_on":"2013-06-28 06:41:42","questions":[{"question":"1. The private domestic sector cannot save if the nation"s external sector is in balance and the government runs a balanced budget.","ID":"1072","explanation":"","answers":[{"ID":"5569","answer":"False","correct":"1"},{"ID":"5568","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory rejects the notion of the money multiplier but still accepts that continually expanding the money supply will inevitably be inflationary.","ID":"1073","explanation":"","answers":[{"ID":"5573","answer":"False","correct":"1"},{"ID":"5572","answer":"True","correct":"0"}]},{"question":"3. By voluntarily issuing debt to match its net spending and taking funds out of the private sector, governments create more non-inflationary room for themselves to spend.","ID":"1074","explanation":"","answers":[{"ID":"5571","answer":"False","correct":"1"},{"ID":"5570","answer":"True","correct":"0"}]}]}, {"ID":"224","name":"Quiz 2013 - 27","added_on":"2013-07-05 08:06:38","questions":[{"question":"1. In recent days, yields on Portugal government bonds have risen sharply and have once again raised the issue that Eurozone governments face insolvency risk. If, for example, Portugal was to leave the Eurozone and in re-establishing its own floating currency, it re-denominated all euro liabilities into this new currency, then they would eliminate that risk on all future liabilities.","ID":"1075","explanation":"","answers":[{"ID":"5589","answer":"False","correct":"1"},{"ID":"5588","answer":"True","correct":"0"}]},{"question":"2. Norway has accumulated one of the largest sovereign funds as a result of its North Sea energy endowments, which have allowed it to maintain high standards of living and still run budget surpluses. Once the resource wealth dissipates and Norway"s external sector moves into deficit, the sovereign fund accumulation will have created more space for non-inflationary spending.","ID":"1076","explanation":"","answers":[{"ID":"5587","answer":"False","correct":"1"},{"ID":"5586","answer":"True","correct":"0"}]},{"question":"3. If a nation is running a current account deficit accompanied by a government sector surplus of equal proportion to GDP, the private domestic sector must to be in deficit.","ID":"1077","explanation":"","answers":[{"ID":"5585","answer":"False","correct":"0"},{"ID":"5584","answer":"True","correct":"1"}]}]}, {"ID":"225","name":"Quiz 2013 - 28","added_on":"2013-07-12 11:50:41","questions":[{"question":"1. A national government which runs a balanced budget over the economic cycle (peak to peak) will ensure that households and firms overall spend more than they earn - that is, run down previous savings or accumulate more net debt, once all the national spending and income adjustments are exhausted.","ID":"1078","explanation":"","answers":[{"ID":"5597","answer":"False","correct":"1"},{"ID":"5596","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) teaches us that a sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues the greater is non-government wealth held in the form of public debt.","ID":"1079","explanation":"","answers":[{"ID":"5599","answer":"False","correct":"0"},{"ID":"5598","answer":"True","correct":"1"}]},{"question":"3. A basic idea in Modern Monetary Theory (MMT) is that excessive real wage demands by workers can cause mass unemployment. ","ID":"1080","explanation":"","answers":[{"ID":"5603","answer":"False","correct":"0"},{"ID":"5602","answer":"True","correct":"1"}]}]}, {"ID":"226","name":"Quiz 2013 - 29","added_on":"2013-07-18 21:17:33","questions":[{"question":"1. Assume that the national accounts of a nation is reveal that its external surplus is equivalent to 2 per cent of GDP and the private domestic sector is saving overall 3 per cent of GDP. We would also observe:","ID":"1081","explanation":"","answers":[{"ID":"5610","answer":"A budget deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"5611","answer":"A budget surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"5612","answer":"A budget deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"5613","answer":"A budget surplus equal to 5 per cent of GDP.","correct":"0"}]},{"question":"2. The British government"s budget deficit remains well above the targets announced in the budget, which means that the government"s claims that it is pursuing fiscal austerity are false.","ID":"1082","explanation":"","answers":[{"ID":"5615","answer":"False","correct":"1"},{"ID":"5614","answer":"True","correct":"0"}]},{"question":"3. In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 2 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 2 per cent (and this is the rate the government pays on all outstanding debt). The government"s budget balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 4 per cent. In Year 2, the government stimulates the economy and pushes the primary budget deficit out to 4 per cent of GDP in recognition of the severity of the recession. In doing so it stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. The central bank holds the nominal interest rate constant but inflation falls to 1 per cent given the slack nature of the economy the previous year. Under these circumstances, the public debt ratio falls even though the budget deficit has risen because of the real growth in the economy.","ID":"1083","explanation":"","answers":[{"ID":"5617","answer":"False","correct":"1"},{"ID":"5616","answer":"True","correct":"0"}]}]}, {"ID":"227","name":"Quiz 2013 - 30","added_on":"2013-07-26 00:12:02","questions":[{"question":"1. The data shows that the private domestic sector in a nation with a very small external deficit (as a % of GDP) is spending less than it earns. However, you cannot tell what the government budget balance will be as a percentage of GDP until you know whether the external balance offsets the private domestic balance.","ID":"1084","explanation":"","answers":[{"ID":"5628","answer":"False","correct":"1"},{"ID":"5627","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) observes that the private sector is wealthier if a currency-issuing government matches its deficit spending with bond issues relative to a situation where the government maintained the same size deficits without issuing bonds to the private sector.","ID":"1085","explanation":"","answers":[{"ID":"5630","answer":"False","correct":"1"},{"ID":"5629","answer":"True","correct":"0"}]},{"question":"3. In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 2 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 2 per cent (and this is the rate the government pays on all outstanding debt). The government"s budget balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 4 per cent. In Year 2, the government introduces a fiscal stimulus and pushes the primary budget deficit out to 3 per cent of GDP to head of a recession. In doing so it stimulates aggregate demand and nominal GDP growth rises to 4 per cent nominal GDP growth rate. The central bank holds the nominal interest rate constant and inflation is stable. In Year 3, there is no change in monetary policy, and the government expands fiscal policy by an additional 1 per cent of GDP. Inflation is stable and nominal GDP growth rises to 6 per cent. From this data, you can conclude that:","ID":"1086","explanation":"","answers":[{"ID":"5647","answer":"The debt ratio progressively falls over the two years.","correct":"0"},{"ID":"5646","answer":"The debt ratio rises in Year 2 but by the end of Year 3, it is lower than it was at the start of Year 1.","correct":"0"},{"ID":"5645","answer":"The debt ratio rises in Years 2 and 3 but the size of the increase (in percentage points) diminishes in the third year.","correct":"1"}]}]}, {"ID":"228","name":"Quiz 2013 - 31","added_on":"2013-08-02 09:21:38","questions":[{"question":"1. If the trend to austerity led to all national governments simultaneously running public surpluses then it would be impossible for all their respective private domestic sectors to save overall.","ID":"1087","explanation":"","answers":[{"ID":"5638","answer":"False","correct":"0"},{"ID":"5637","answer":"True","correct":"1"}]},{"question":"2. Which budget deficit outcome is the most expansionary?","ID":"1088","explanation":"","answers":[{"ID":"5639","answer":"1 per cent of GDP","correct":"0"},{"ID":"5640","answer":"2 per cent of GDP","correct":"0"},{"ID":"5641","answer":"3 per cent of GDP","correct":"1"},{"ID":"5642","answer":"We need to know the structural and automatic stabiliser components before we can answer","correct":"0"}]},{"question":"3. When the government matches its deficit with debt-issuance it changes the portfolio of wealth held in the non-government sector. The impact on purchasing power is equivalent to a leakage from the expenditure system (akin to taxation, saving or imports) which reduces the expansionary impact of the government deficit spending.","ID":"1089","explanation":"","answers":[{"ID":"5644","answer":"False","correct":"1"},{"ID":"5643","answer":"True","correct":"0"}]}]}, {"ID":"229","name":"Quiz 2013 - 32","added_on":"2013-08-07 17:43:28","questions":[{"question":"1. People are richer if the government issues bonds to match its net deficit spending relative to a situation where the government just instructed the central bank to ensure all spending cleared the payments system.","ID":"1090","explanation":"","answers":[{"ID":"5655","answer":"False","correct":"1"},{"ID":"5654","answer":"True","correct":"0"}]},{"question":"2. The sectoral balances perspective of the national accounting framework tells us that the private domestic sector cannot save if a nations external sector is in balance and the government runs a balanced budget.","ID":"1091","explanation":"","answers":[{"ID":"5662","answer":"False","correct":"1"},{"ID":"5661","answer":"True","correct":"0"}]},{"question":"3. So-called \\\"progressives\\\" tend to argue that if austerity is to be imposed it is better to increase taxes (particularly on high income earners). Conversely, \\\"conservatives\\\" demand spending cuts and privatisation. In terms of the initial impact on national income, which policy option will be more damaging - a tax increase which aims to increase tax revenue at the current level of national income by $x or a spending cut of $x?","ID":"1092","explanation":"","answers":[{"ID":"5658","answer":"Tax increase","correct":"0"},{"ID":"5659","answer":"Spending cut","correct":"1"},{"ID":"5660","answer":"Both will be equivalent","correct":"0"}]}]}, {"ID":"230","name":"Quiz 2013 - 33","added_on":"2013-08-15 21:34:22","questions":[{"question":"1. Nations with external deficits operate within the constraint that national income movements in response to aggregate spending will ensure that the two remaining sectors (government and private domestic) will spend more than they receive, irrespective of the GDP growth rate.","ID":"1093","explanation":"","answers":[{"ID":"5670","answer":"False","correct":"1"},{"ID":"5669","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) makes a crucial distinction between the issuer of the currency and the user of that currency. Unlike a household, which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"1094","explanation":"","answers":[{"ID":"5672","answer":"False","correct":"1"},{"ID":"5671","answer":"True","correct":"0"}]},{"question":"3. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.","ID":"1095","explanation":"","answers":[{"ID":"5676","answer":"False","correct":"1"},{"ID":"5675","answer":"True","correct":"0"}]}]}, {"ID":"231","name":"Quiz 2013 - 34","added_on":"2013-08-23 09:02:52","questions":[{"question":"1. Start from a situation where the external surplus is the equivalent of 2 per cent of GDP and the budget surplus is 2 per cent. If the budget balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then:","ID":"1096","explanation":"","answers":[{"ID":"5683","answer":"National income rises and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"5684","answer":"National income falls and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"5685","answer":"National income rises and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"1"},{"ID":"5686","answer":"National income remains unchanged and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"},{"ID":"5687","answer":"National income falls and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"}]},{"question":"2. Taxes do not fund government spending but they do create unemployment.","ID":"1097","explanation":"","answers":[{"ID":"5689","answer":"False","correct":"0"},{"ID":"5688","answer":"True","correct":"1"}]},{"question":"3. Some progressives call for bank lending to be more closely regulated to ensure that all bank loans were backed by reserves held at the bank to stop another credit binge. However, financial market interests argue that this would unnecessarily reduce the capacity of the banks to lend and damage the economy. Both are wrong.","ID":"1098","explanation":"","answers":[{"ID":"5691","answer":"False","correct":"0"},{"ID":"5690","answer":"True","correct":"1"}]}]}, {"ID":"232","name":"Quiz 2013 - 35","added_on":"2013-08-29 17:04:59","questions":[{"question":"1. A rising budget deficit indicates an expansionary shift in government policy and the challenge is to ensure the nominal demand stimulus does not exceed the real capacity of the economy to respond by increasing real output.","ID":"1099","explanation":"","answers":[{"ID":"5699","answer":"False","correct":"1"},{"ID":"5698","answer":"True","correct":"0"}]},{"question":"2. The central bank can influence the supply of money via the price it provides reserves to the commercial banks but this influence is compromised by the level at which it sets the target monetary policy rate.","ID":"1100","explanation":"","answers":[{"ID":"5701","answer":"False","correct":"0"},{"ID":"5700","answer":"True","correct":"1"}]},{"question":"3. If the private domestic sector spends less than it earns overall and the nation runs a small external deficit, then the government can never achieve a budget surplus no matter what the level of national income.","ID":"1101","explanation":"","answers":[{"ID":"5703","answer":"False","correct":"0"},{"ID":"5702","answer":"True","correct":"1"}]}]}, {"ID":"233","name":"Quiz 2013 - 36","added_on":"2013-09-06 09:25:34","questions":[{"question":"1. In most nations at present, both the government and the private domestic sectors are carrying historically large debt ratios. However, under current public sector debt-issuance arrangements and given the national accounting relations, only one of these sectors can reduce its debt level at a time.","ID":"1102","explanation":"","answers":[{"ID":"5711","answer":"False","correct":"1"},{"ID":"5710","answer":"True","correct":"0"}]},{"question":"2. If workers secure wage increases in line with the growth in their contribution to production their share in national income will be stable.","ID":"1103","explanation":"","answers":[{"ID":"5713","answer":"False","correct":"1"},{"ID":"5712","answer":"True","correct":"0"}]},{"question":"3. The real spending capacity of a sovereign (currency-issuing) government is constrained by the tax revenue it receives.","ID":"1104","explanation":"","answers":[{"ID":"5715","answer":"False","correct":"0"},{"ID":"5714","answer":"True","correct":"1"}]}]}, {"ID":"234","name":"Quiz 2013 - 37","added_on":"2013-09-13 08:04:42","questions":[{"question":"1. If workers succeed in gaining real wages increases then, other things equal, the share of profits in national income is squeezed.","ID":"1105","explanation":"","answers":[{"ID":"5723","answer":"False","correct":"1"},{"ID":"5722","answer":"True","correct":"0"}]},{"question":"2. Government spending can crowd out private spending, which means that an increase in the former will reduce the latter.","ID":"1106","explanation":"","answers":[{"ID":"5725","answer":"False","correct":"0"},{"ID":"5724","answer":"True","correct":"1"}]},{"question":"3. Suppose that the government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.","ID":"1107","explanation":"","answers":[{"ID":"5727","answer":"False","correct":"0"},{"ID":"5726","answer":"True","correct":"1"}]}]}, {"ID":"235","name":"Quiz 2013 - 38","added_on":"2013-09-20 10:40:10","questions":[{"question":"1. When an external deficit and public deficit coincide, the private sector is in balance (spending is equal to income).","ID":"1108","explanation":"","answers":[{"ID":"5739","answer":"False","correct":"1"},{"ID":"5738","answer":"True","correct":"0"}]},{"question":"2. Which scenario represents a more expansionary outcome:n(a) A budget deficit equivalent to 5 per cent of GDP (including the impact of automatic stabilisers equivalent to 3 per cent of GDP).n(b) A budget deficit equivalent to 3 per cent of GDP.n(c) You cannot tell because you do not know the decomposition between the cyclical and structural components in Option (b)","ID":"1109","explanation":"","answers":[{"ID":"5740","answer":"Option (a)","correct":"1"},{"ID":"5741","answer":"Option (b)","correct":"0"},{"ID":"5742","answer":"Option (c)","correct":"0"}]},{"question":"3. With rising aged dependency ratios, the fact that a sovereign government is never financially constrained means that it can always provide first-class health care to its aeging citizens.","ID":"1110","explanation":"","answers":[{"ID":"5744","answer":"False","correct":"1"},{"ID":"5743","answer":"True","correct":"0"}]}]}, {"ID":"236","name":"Quiz 2013 - 39","added_on":"2013-09-27 08:54:37","questions":[{"question":"1. A nation running a very small current account deficit with the private domestic sector spending less than its income, will always be running a budget deficit at the current national income level.","ID":"1111","explanation":"","answers":[{"ID":"5756","answer":"False","correct":"0"},{"ID":"5755","answer":"True","correct":"1"}]},{"question":"2. A declining budget deficit or increasing budget surplus signals an intention by the government to attenuate the growth in aggregate demand.","ID":"1112","explanation":"","answers":[{"ID":"5754","answer":"False","correct":"1"},{"ID":"5753","answer":"True","correct":"0"}]},{"question":"3. Greek or Spanish export competitiveness (within the Eurozone) will increase if they can successfully reduce domestic wages and prices relative to other nations irrespective of the impact of this policy on real GDP growth.","ID":"1113","explanation":"","answers":[{"ID":"5758","answer":"False","correct":"1"},{"ID":"5757","answer":"True","correct":"0"}]}]}, {"ID":"237","name":"Quiz 2013 - 40","added_on":"2013-10-04 15:27:03","questions":[{"question":"1. A budget surplus equivalent to 1 per cent of GDP ratio necessarily reflects a more contractionary fiscal policy stance than a budget deficit equivalent to 1 per cent of GDP.","ID":"1114","explanation":"","answers":[{"ID":"5766","answer":"False","correct":"1"},{"ID":"5765","answer":"True","correct":"0"}]},{"question":"2. Any substantial increase in the monetary base can be sustained only if interest rates are pushed down to low levels, ultimately to zero.","ID":"1115","explanation":"","answers":[{"ID":"5768","answer":"False","correct":"1"},{"ID":"5767","answer":"True","correct":"0"}]},{"question":"3. In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1.0 per cent. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The inflation rate is stable at 1 per cent per annum. The government"s primary budget balance records a deficit equivalent to 1 per cent of GDP and the public debt ratio rises by 3 per cent. In Year 2, the government pushes the primary budget deficit out to 2 per cent of GDP and in doing so stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio will fall in Year 2.","ID":"1116","explanation":"","answers":[{"ID":"5770","answer":"False","correct":"0"},{"ID":"5769","answer":"True","correct":"1"}]}]}, {"ID":"238","name":"Quiz 2013 - 41","added_on":"2013-10-11 08:23:12","questions":[{"question":"1. Nation A is running a small current account deficit and its private domestic sector is saving overall. Nation B has a smaller external deficit (relative to its GDP) but its private domestic sector is balancing its spending and income. The governments in both Nations have to be running deficits.n","ID":"1117","explanation":"","answers":[{"ID":"5778","answer":"False","correct":"0"},{"ID":"5777","answer":"True","correct":"1"}]},{"question":"2. Modern Monetary Theory (MMT) explains how central banks sell bonds to drain excess bank reserves in order to maintain their given interest rate setting. We know that the same outcome can be achieved by paying interest to the commercial banks on the same reserves. Ignoring any reserve requirements, this means that there is no need for government (via the central bank) to issue debt when it net spends.","ID":"1118","explanation":"","answers":[{"ID":"5780","answer":"False","correct":"1"},{"ID":"5779","answer":"True","correct":"0"}]},{"question":"3. The advantage of the government issuing bonds to match its deficit rather than just instructing the central bank to credit bank accounts in recognition of its spending intentions is that the private sector is wealthier as a consequence.","ID":"1119","explanation":"","answers":[{"ID":"5782","answer":"False","correct":"1"},{"ID":"5781","answer":"True","correct":"0"}]}]}, {"ID":"239","name":"Quiz 2013 - 42","added_on":"2013-10-18 09:49:52","questions":[{"question":"1. Choose the correct response (all balances expressed as a per cent of GDP):n(a) A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.n(b) A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.n(c) A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.n(d) None of the above are possible as they all defy the sectoral balances accounting identity. ","ID":"1120","explanation":"","answers":[{"ID":"5789","answer":"Option (a)","correct":"0"},{"ID":"5790","answer":"Option (b)","correct":"1"},{"ID":"5791","answer":"Option (c)","correct":"0"},{"ID":"5792","answer":"Option (d)","correct":"0"}]},{"question":"2. For workers to regain a larger share of national income, nominal wages have to grow faster than inflation - that is, the real wage has to rise.","ID":"1121","explanation":"","answers":[{"ID":"5794","answer":"False","correct":"1"},{"ID":"5793","answer":"True","correct":"0"}]},{"question":"3. Economists use rules of thumb to make estimates of the future direction of key aggregates based upon assumptions about the movement in related aggregates. Say, we form the view that over the next year: (a) the average working week will be constant in hours; (b) real GDP growth rate will be 3 per cent; (c) output per unit of labour input (persons) grows at 1.5 per cent; and (d) the labour force maintains a growth rate of 1.5 per cent per annum. Using an appropriate rule of thumb we would project that the:","ID":"1122","explanation":"","answers":[{"ID":"5795","answer":"Unemployment rate will rise in the coming year by 1.5 per cent.","correct":"0"},{"ID":"5796","answer":"nemployment rate will fall in the coming year by 1.5 per cent.","correct":"0"},{"ID":"5797","answer":"The unemployment rate will be unchanged.","correct":"1"}]}]}, {"ID":"240","name":"Quiz 2013 - 43","added_on":"2013-10-24 19:17:34","questions":[{"question":"1. Under current public sector debt-issuance arrangements (where sovereign governments match their deficits with issues of debt), the government and the private domestic sector cannot simultaneously spend less than they earn.","ID":"1123","explanation":"","answers":[{"ID":"5805","answer":"False","correct":"1"},{"ID":"5804","answer":"True","correct":"0"}]},{"question":"2. The government needs to raise tax revenue in order to spend.","ID":"1124","explanation":"","answers":[{"ID":"5807","answer":"False","correct":"0"},{"ID":"5806","answer":"True","correct":"1"}]},{"question":"3. The estimates provided by institutions such as the OECD and the IMF of the size of the automatic stabilisers are typically biased downwards.","ID":"1125","explanation":"","answers":[{"ID":"5809","answer":"False","correct":"0"},{"ID":"5808","answer":"True","correct":"1"}]}]}, {"ID":"241","name":"Quiz 2013 - 44","added_on":"2013-11-01 09:17:55","questions":[{"question":"1. f the external sector was running a surplus equivalent to 4 per cent of GDP, and the sum of all the private sector spending plans indicated it was desiring to run a surplus overall equivalent to 6 per cent, then the government could safely plan on achieving a budget surplus of 2 per cent of GDP.","ID":"1126","explanation":"","answers":[{"ID":"5817","answer":"False","correct":"1"},{"ID":"5816","answer":"True","correct":"0"}]},{"question":"2. The automatic stabilisers built into the government budget work counter-cyclically and push the budget balance back to its appropriate level after a major cyclical disturbance.","ID":"1127","explanation":"","answers":[{"ID":"5819","answer":"False","correct":"1"},{"ID":"5818","answer":"True ","correct":"0"}]},{"question":"3. The monetary base always adjusts by increasing when commercial banks increase their loans.","ID":"1128","explanation":"","answers":[{"ID":"5821","answer":"False","correct":"0"},{"ID":"5820","answer":"True ","correct":"1"}]}]}, {"ID":"242","name":"Quiz 2013 - 45","added_on":"2013-11-08 10:37:25","questions":[{"question":"1. Using national accounting rules which dictate that the government balance is always equal to the non-government balance with an opposite sign, we can conclude that if the public sector successfully achieves a budget surplus then the private sector must be spending more than it is earning (that is, running a deficit).","ID":"1129","explanation":"","answers":[{"ID":"5829","answer":"False","correct":"1"},{"ID":"5828","answer":"True","correct":"0"}]},{"question":"2. If the stock of aggregate demand exceeds the capacity of the productive sector to respond by producing extra real goods and services then inflation is inevitable.","ID":"1130","explanation":"","answers":[{"ID":"5831","answer":"False","correct":"1"},{"ID":"5830","answer":"True ","correct":"0"}]},{"question":"3. Assume that the government increases spending by $200 billion at the start of each year and maintains this policy for the next three years from now. Economists estimate the spending multiplier to be 2 and the impact is exhausted within each year (all induced consumption is completed within 12 months). The tax multiplier is estimated to be equal to 1 and the current average tax rate is equal to 25 per cent (so tax revenue rises by 25 cents for every extra dollar of GDP produced ). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"1131","explanation":"","answers":[{"ID":"5833","answer":"$400","correct":"0"},{"ID":"5832","answer":"$1200","correct":"1"},{"ID":"5834","answer":"$300","correct":"0"},{"ID":"5835","answer":"$900","correct":"0"}]}]}, {"ID":"243","name":"Quiz 2013 - 46","added_on":"2013-11-15 09:35:35","questions":[{"question":"1. Only one of the following propositions is possible for a nation over any given period (with all balances expressed as a per cent of GDP):","ID":"1132","explanation":"","answers":[{"ID":"5842","answer":"An external deficit accompanied by a public surplus of equal size and the private domestic sector spending saving overall.","correct":"0"},{"ID":"5843","answer":"An external deficit accompanied by a public surplus of equal size and the private domestic sector spending dis-saving overall.","correct":"1"},{"ID":"5844","answer":"An external deficit accompanied by a larger public surplus and the private domestic sector spending saving overall.","correct":"0"}]},{"question":"2. If in attempting to estimate the cyclical component of a government budget outcome we underestimate the potential capacity of an economy, we will conclude that the government"s discretionary fiscal position is less expansionary than it actually is.","ID":"1133","explanation":"","answers":[{"ID":"5846","answer":"False","correct":"1"},{"ID":"5845","answer":"True","correct":"0"}]},{"question":"3. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.","ID":"1134","explanation":"","answers":[{"ID":"5848","answer":"False","correct":"1"},{"ID":"5847","answer":"True","correct":"0"}]}]}, {"ID":"244","name":"Quiz 2013 - 47","added_on":"2013-11-22 10:55:15","questions":[{"question":"1. A nation can run a government sector surplus, which is larger as a proportion to GDP than the external deficit, while the private domestic sector is spending more than they are earning.","ID":"1135","explanation":"","answers":[{"ID":"5856","answer":"False","correct":"0"},{"ID":"5855","answer":"True","correct":"1"}]},{"question":"2. The automatic stabilisers built into national government fiscal policy always operate in a counter-cyclical manner.","ID":"1136","explanation":"","answers":[{"ID":"5858","answer":"False","correct":"0"},{"ID":"5857","answer":"True","correct":"1"}]},{"question":"3. Sovereign government spending becomes more costly when the bond markets push yields on new public bond issues up.","ID":"1137","explanation":"","answers":[{"ID":"5862","answer":"False","correct":"1"},{"ID":"5861","answer":"True","correct":"0"}]}]}, {"ID":"245","name":"Quiz 2013 - 48","added_on":"2013-11-28 18:47:59","questions":[{"question":"1. The distinction between structural and the cyclical components of the final government balance helps us to determine the direction of the discretionary fiscal policy stance of the government. In that context, which of the following situations represents the more expansionary outcome:","ID":"1138","explanation":"","answers":[{"ID":"5878","answer":"You cannot tell because you do not know the decomposition between the cyclical and structural components.","correct":"0"},{"ID":"5876","answer":"A government deficit equivalent to 5 per cent of GDP","correct":"1"},{"ID":"5877","answer":"A government deficit equivalent to 3 per cent of GDP","correct":"0"}]},{"question":"2. If private domestic investment is greater than private domestic saving and the current account is in deficit then the government balance has to be in deficit at all levels of GDP.","ID":"1139","explanation":"","answers":[{"ID":"5873","answer":"False","correct":"1"},{"ID":"5872","answer":"True","correct":"0"}]},{"question":"3. If the ECB uses \\\"overt monetary financing\\\" (OMF) to support the net public spending within the Eurozone, it would still require debt issuance if they wanted to target a non-zero policy interest rate.","ID":"1140","explanation":"","answers":[{"ID":"5875","answer":"False","correct":"1"},{"ID":"5874","answer":"True","correct":"0"}]}]}, {"ID":"246","name":"Quiz 2013 - 48","added_on":"2013-12-06 06:56:09","questions":[{"question":"1. Assuming the expenditure multiplier is greater than 1, if the government increases its deficit they will have a greatest impact on aggregate demand if there are no offsetting monetary operations by the central bank (government bond sales) draining the excess reserves created.","ID":"1141","explanation":"","answers":[{"ID":"5890","answer":"False","correct":"1"},{"ID":"5889","answer":"True","correct":"0"}]},{"question":"2. If the government achieves in reducing its fiscal deficit by say $10 billion, the net financial assets destroyed by this withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"1142","explanation":"","answers":[{"ID":"5888","answer":"False","correct":"1"},{"ID":"5887","answer":"True","correct":"0"}]},{"question":"3. Which government deficit outcome is the most expansionary?","ID":"1143","explanation":"","answers":[{"ID":"5891","answer":"1 per cent of GDP.","correct":"0"},{"ID":"5892","answer":"2 per cent of GDP.","correct":"0"},{"ID":"5893","answer":"3 per cent of GDP.","correct":"1"},{"ID":"5894","answer":"Cannot tell because it depends on the decomposition of the structural and cyclical components.","correct":"0"}]}]}, {"ID":"247","name":"Quiz 2013 - 49","added_on":"2013-12-12 16:52:48","questions":[{"question":"1. If workers cannot maintain nominal wages growth equal to the growth in labour productivity, then their real wages fall.","ID":"1144","explanation":"","answers":[{"ID":"5902","answer":"False","correct":"1"},{"ID":"5901","answer":"True","correct":"0"}]},{"question":"2. Assume the central bank keeps the inflation rate steady and equal to the nominal interest rate. Under these monetary conditions, a government can push the primary budget balance into surplus and drive down the public debt ratio even if the fiscal austerity causes a recession.","ID":"1145","explanation":"","answers":[{"ID":"5904","answer":"False","correct":"0"},{"ID":"5903","answer":"True","correct":"1"}]},{"question":"3. Suppose a government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.","ID":"1146","explanation":"","answers":[{"ID":"5906","answer":"False","correct":"0"},{"ID":"5905","answer":"True","correct":"1"}]}]}, {"ID":"248","name":"Quiz 2013 - 50","added_on":"2013-12-20 10:23:31","questions":[{"question":"1. A public works program that digs holes and fills them in again has exactly the same impact on current economic growth ($-for-$) as a private investment plan which constructs a new factory.","ID":"1147","explanation":"","answers":[{"ID":"5917","answer":"False","correct":"0"},{"ID":"5916","answer":"True","correct":"1"}]},{"question":"2. Economists note that the automatic stabilisers in the government"s budget increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the budget outcome to the business cycle could be eliminated if the government followed a fiscal rule such that it had to balance its budget at all times.","ID":"1148","explanation":"","answers":[{"ID":"5919","answer":"False","correct":"1"},{"ID":"5918","answer":"True","correct":"0"}]},{"question":"3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation. ","ID":"1149","explanation":"","answers":[{"ID":"5924","answer":"False","correct":"0"},{"ID":"5923","answer":"True","correct":"1"}]},{"question":"4. Special Santa Question: Santa is having trouble keeping his sled and related delivery infrastructure in working order. But he knows","ID":"1150","explanation":"","answers":[{"ID":"5922","answer":"(c) Dear Bobby or Sally, there comes a time when we come of an age where we should know the truth about Santa.","correct":"0"},{"ID":"5921","answer":"(b) 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.","correct":"0"},{"ID":"5920","answer":"(a) that he is a household and thus a user of the currency and will have to save, earn or borrow to generate the funds necessary to maintain his equipment.","correct":"1"}]}]}, {"ID":"249","name":"Quiz 2013 - 51","added_on":"2013-12-27 08:26:56","questions":[{"question":"1. If the external sector was running a surplus equivalent to 4 per cent of GDP, and the sum of all the private sector spending plans indicated it was desiring to run a surplus overall equivalent to 6 per cent, then the government could safely plan on achieving a budget surplus of 2 per cent of GDP.","ID":"1151","explanation":"","answers":[{"ID":"5932","answer":"False","correct":"1"},{"ID":"5931","answer":"True","correct":"0"}]},{"question":"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.","ID":"1152","explanation":"","answers":[{"ID":"5934","answer":"False","correct":"1"},{"ID":"5933","answer":"True","correct":"0"}]},{"question":"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.","ID":"1153","explanation":"","answers":[{"ID":"5936","answer":"False","correct":"0"},{"ID":"5935","answer":"True","correct":"1"}]}]}, {"ID":"250","name":"Quiz 2014 - 1","added_on":"2014-01-02 09:36:23","questions":[{"question":"1. It is common to use the term deleveraging to describe the reduction in indebtedness for a particular sector or group in the economy. In most nations at present, both the government and the private domestic sectors are carrying historically large debt ratios. However, under current public sector debt-issuance arrangements and given the national accounting relations, only one of these sectors can reduce its debt level at a time.","ID":"1154","explanation":"","answers":[{"ID":"5944","answer":"False","correct":"1"},{"ID":"5943","answer":"True","correct":"0"}]},{"question":"2. 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.","ID":"1155","explanation":"","answers":[{"ID":"5952","answer":"False","correct":"1"},{"ID":"5951","answer":"True","correct":"0"}]},{"question":"3. A central bank could always directly purchase treasury debt to facilitate the government deficit without compromising its monetary policy stance as long as it is running a near zero interest rate policy target.","ID":"1156","explanation":"","answers":[{"ID":"5950","answer":"False","correct":"1"},{"ID":"5949","answer":"True","correct":"0"}]}]}, {"ID":"251","name":"Quiz 2014 - 2","added_on":"2014-01-10 08:37:13","questions":[{"question":"1. Quantitative easing and an expansion of net public spending both add net financial assets to the non-government sector but the former aims to stimulate demand by lowering interest rates while the latter policy choice more directly adds demand to the system.","ID":"1157","explanation":"","answers":[{"ID":"5960","answer":"False","correct":"1"},{"ID":"5959","answer":"True","correct":"0"}]},{"question":"2. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"1158","explanation":"","answers":[{"ID":"5962","answer":"False","correct":"1"},{"ID":"5961","answer":"True","correct":"0"}]},{"question":"3. When a government such as the US or Australian government voluntarily constrains itself by issuing debt to the private sector to match its net spending position (deficit), it reduces the funds available for private spending.","ID":"1159","explanation":"","answers":[{"ID":"5964","answer":"False","correct":"1"},{"ID":"5963","answer":"True","correct":"0"}]}]}, {"ID":"252","name":"Quiz 2014 - 3","added_on":"2014-01-17 07:28:24","questions":[{"question":"1. Start from a situation where the external surplus is the equivalent of 2 per cent of GDP and the government surplus is 2 per cent. If the government balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then:nnnnn","ID":"1160","explanation":"","answers":[{"ID":"5971","answer":"National income rises and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"5972","answer":"nNational income remains unchanged and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"5973","answer":"National income falls and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"5974","answer":"National income rises and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"1"},{"ID":"5975","answer":"nNational income remains unchanged and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP","correct":"0"},{"ID":"5976","answer":"National income falls and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"}]},{"question":"2. Assume a nation is running an external surplus equivalent to 2 per cent of GDP and the private domestic sector is currently saving overall 1 per cent of GDP. In this situation, the government must be running:","ID":"1161","explanation":"","answers":[{"ID":"5977","answer":"A deficit equal to 1 per cent of GDP.","correct":"0"},{"ID":"5978","answer":"A surplus equal to 1 per cent of GDP.","correct":"1"},{"ID":"5979","answer":"A deficit equal to 3 per cent of GDP.","correct":"0"},{"ID":"5980","answer":"A surplus equal to 3 per cent of GDP.","correct":"0"}]},{"question":"3. Many progressive observers are demanding that bank lending should be more closely regulated to ensure that all bank loans were backed by reserves held at the bank. However, this would unnecessarily reduce the capacity of the banks to lend. ","ID":"1162","explanation":"","answers":[{"ID":"5982","answer":"False","correct":"1"},{"ID":"5981","answer":"True","correct":"0"}]}]}, {"ID":"253","name":"Quiz 2014 - 4","added_on":"2014-01-24 10:22:58","questions":[{"question":"1. If the household saving ratio and/or the nation"s external deficit rises, there is no necessity for the government deficit to rise in order to maintain current output growth.","ID":"1163","explanation":"","answers":[{"ID":"5990","answer":"False","correct":"0"},{"ID":"5989","answer":"True","correct":"1"}]},{"question":"2. A nation experiences growth in total employment in a particular month in net terms, rising unemployment, and a marginal decline in the labour force participation rate. Taken together this information tells you that:","ID":"1164","explanation":"","answers":[{"ID":"5991","answer":"Labour force growth outstripped employment growth but was less than the growth in the working age population.","correct":"1"},{"ID":"5992","answer":"The working age population grew faster than employment and offset the decline in the labour force arising from the drop in the participation rate.","correct":"0"},{"ID":"5993","answer":"The labour force grew faster than employment but you cannot tell what happened to the working age population from the information provided.","correct":"0"}]},{"question":"3. If Brussels relaxed the budget restrictions on national governments that are applicable under the Stability and Growth Pact (3 per cent deficit to GDP ratios and 60 per cent public debt to GDP ratios) then the current solvency risk facing several EMU members would be resolved. ","ID":"1165","explanation":"","answers":[{"ID":"5995","answer":"False","correct":"1"},{"ID":"5994","answer":"True","correct":"0"}]}]}, {"ID":"254","name":"Quiz 2014 - 5","added_on":"2014-01-30 22:03:28","questions":[{"question":"1. Increasing tax revenue provides the government with more capacity to spend.","ID":"1166","explanation":"","answers":[{"ID":"6003","answer":"False","correct":"0"},{"ID":"6002","answer":"True","correct":"1"}]},{"question":"2. If there is an external deficit, and the domestic private sector successfully increases its overall saving as a percentage of GDP, then income adjustments will ensure the government fiscal balance is in deficit.","ID":"1167","explanation":"","answers":[{"ID":"6005","answer":"False","correct":"0"},{"ID":"6004","answer":"True","correct":"1"}]},{"question":"3. Estimates of structural fiscal deficits published the multilateral agencies such as the IMF and the OECD are to be treated with suspicion because they are based on excessively optimistic estimates of potential GDP.","ID":"1168","explanation":"","answers":[{"ID":"6007","answer":"False","correct":"1"},{"ID":"6006","answer":"True","correct":"0"}]}]}, {"ID":"255","name":"Quiz 2014 - 6","added_on":"2014-02-07 14:43:00","questions":[{"question":"1. An Australian trade unionist this week has argued that real wages in Australia in some industries are too high and have caused unemployment. From the perspective of Modern Monetary Theory (MMT) he is correct.","ID":"1169","explanation":"","answers":[{"ID":"6022","answer":"False","correct":"0"},{"ID":"6021","answer":"True","correct":"1"}]},{"question":"2. A government desires to reduce the unemployment rate over the next year and gears its macroeconomic policy to maintaining trend real GDP growth, which is 3 per cent per annum. If labour productivity is growing at 2 per cent per annum and the labour force is growing at 1.5 per cent per annum and the average working week is constant in hours, will the government succeed in its aim?","ID":"1170","explanation":"","answers":[{"ID":"6024","answer":"No","correct":"1"},{"ID":"6023","answer":"Yes","correct":"0"}]},{"question":"3. A sovereign national government can run a balanced budget over the business cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will only be in surplus if the external balance is in surplus.","ID":"1171","explanation":"","answers":[{"ID":"6020","answer":"False","correct":"0"},{"ID":"6019","answer":"True","correct":"1"}]}]}, {"ID":"256","name":"Quiz 2014 - 7","added_on":"2014-02-13 15:44:37","questions":[{"question":"1. Government spending which is accompanied by a bond sale to the private sector adds less to aggregate demand than would be the case if there was no bond sale.","ID":"1172","explanation":"","answers":[{"ID":"6032","answer":"False","correct":"1"},{"ID":"6031","answer":"True","correct":"0"}]},{"question":"2. If the external sector is always in surplus, then the government can safely run a surplus and not impede economic growth.","ID":"1173","explanation":"","answers":[{"ID":"6034","answer":"False","correct":"1"},{"ID":"6033","answer":"True","correct":"0"}]},{"question":"3. In a stock-flow consistent macroeconomics, we have to always trace the impact of flows during a period on the relevant stocks at the end of the period. Accordingly, government and private investment spending are two examples of flows that adds to the stock of aggregate demand which in turn impacts on GDP.","ID":"1174","explanation":"","answers":[{"ID":"6036","answer":"False","correct":"1"},{"ID":"6035","answer":"True","correct":"0"}]}]}, {"ID":"257","name":"Quiz 2014 - 8","added_on":"2014-02-21 07:33:59","questions":[{"question":"1. This week the Australian Bureau of Statistics released data showing that nominal wages growth in Australia over the last 12 months was 2.6 per cent. Over the same period, the annual inflation rate has been 2.7 per cent. As a result of this information we can conclude that there has been a redistribution of national income to profits because the real wage has fallen.","ID":"1175","explanation":"","answers":[{"ID":"6044","answer":"False","correct":"1"},{"ID":"6043","answer":"True","correct":"0"}]},{"question":"2. The non-government sector net wealth rises when the government issues bonds to exactly match ($-for-$) the increase in the fiscal deficit.","ID":"1176","explanation":"","answers":[{"ID":"6046","answer":"False","correct":"1"},{"ID":"6045","answer":"True ","correct":"0"}]},{"question":"3. Assume that a national is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would always find:","ID":"1177","explanation":"","answers":[{"ID":"6047","answer":"A public fiscal deficit.","correct":"1"},{"ID":"6048","answer":"A public fiscal surplus.","correct":"0"},{"ID":"6049","answer":"Cannot tell because we don"t know the scale of the private domestic sector saving as a % of GDP.","correct":"0"}]}]}, {"ID":"258","name":"Quiz 2014 - 9","added_on":"2014-02-28 08:51:35","questions":[{"question":"1. When the private domestic sector decides to increase the surplus of its income over spending we cannot conclude that the national government has to increase its net spending (deficit) to avoid employment losses.","ID":"1178","explanation":"","answers":[{"ID":"6065","answer":"False","correct":"0"},{"ID":"6064","answer":"True","correct":"1"}]},{"question":"2. When an external deficit and public deficit coincide, there must be a private sector deficit. This suggests that governments can only run budget deficits safely to support a private sector surplus, when net exports are strong.","ID":"1179","explanation":"","answers":[{"ID":"6059","answer":"False","correct":"1"},{"ID":"6058","answer":"True","correct":"0"}]},{"question":"3. The stronger is the the demand for public bonds at a government auction the lower the yields will be at that asset maturity but this tells us nothing about the effect of fiscal deficits on short-term interest rate","ID":"1180","explanation":"","answers":[{"ID":"6063","answer":"False","correct":"0"},{"ID":"6062","answer":"True","correct":"1"}]}]}, {"ID":"259","name":"Quiz 2014 - 10","added_on":"2014-03-07 10:04:40","questions":[{"question":"1. Modern Monetary Theory (MMT) tells us that while a currency-issuing government running a deficit can never reduce the public debt to GDP ratio the rising ratio is of no concern because such a government faces no risk of insolvency. ","ID":"1181","explanation":"","answers":[{"ID":"6073","answer":"False","correct":"1"},{"ID":"6072","answer":" True","correct":"0"}]},{"question":"2. In 1998, Russia was forced to default on its outstanding public debt after it faced a major collapse of oil prices in world markets which negated its capacity to repay foreign currency-denominated loans via net exports. But the defaults were ultimately due to the currency peg against the US dollar that they voluntarily had put in place.","ID":"1182","explanation":"","answers":[{"ID":"6075","answer":"False","correct":"1"},{"ID":"6074","answer":"True","correct":"0"}]},{"question":"3. Imagine that macroeconomic policy is geared towards keeping real GDP growth on a 3 per cent per annum trend. If labour productivity is growing at 2 per cent per annum, the labour force is growing at 1.5 per cent per annum, and the average working week is constant in hours, then this policy regime will result in:","ID":"1183","explanation":"","answers":[{"ID":"6076","answer":"a rising unemployment rate","correct":"1"},{"ID":"6077","answer":"a declining unemployment rate","correct":"0"},{"ID":"6078","answer":"an unchanged unemployment rate","correct":"0"}]}]}, {"ID":"260","name":"Quiz 2014 - 11","added_on":"2014-03-14 09:14:19","questions":[{"question":"1. If the central bank offers a positive interest rate on overnight reserves held by the commercial banks equal to its target policy rate, then it no longer has to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements in place when answering).","ID":"1184","explanation":"","answers":[{"ID":"6088","answer":"False","correct":"0"},{"ID":"6087","answer":"True","correct":"1"}]},{"question":"2. The payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend to increase the volume of broad money in the system (ignore any reserve requirements in place when answering).","ID":"1185","explanation":"","answers":[{"ID":"6092","answer":"False","correct":"1"},{"ID":"6091","answer":"True","correct":"0"}]},{"question":"3. Modern Monetary Theory (MMT) shows that a sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.","ID":"1186","explanation":"","answers":[{"ID":"6090","answer":"False","correct":"1"},{"ID":"6089","answer":"True","correct":"0"}]}]}, {"ID":"261","name":"Quiz 2014 - 12","added_on":"2014-03-21 09:08:47","questions":[{"question":"1. When a currency-issuing government voluntarily constrains itself to borrow from the private sector to cover its deficit spending, it logically reduces the funds available for private investment expenditure.","ID":"1187","explanation":"","answers":[{"ID":"6107","answer":"False","correct":"1"},{"ID":"6106","answer":"True","correct":"0"}]},{"question":"2. An increasing fiscal deficit tells us nothing about the government"s policy intentions.","ID":"1188","explanation":"","answers":[{"ID":"6102","answer":"False","correct":"0"},{"ID":"6101","answer":"True","correct":"1"}]},{"question":"3. The crucial difference between a monetary system based on the convertible currency backed by gold and a fiat currency monetary is that under the former system:","ID":"1189","explanation":"","answers":[{"ID":"6103","answer":"excessive national government spending led to inflation.","correct":"0"},{"ID":"6104","answer":"the national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"6105","answer":"the national government could not use net spending to achieve full employment.","correct":"0"}]}]}, {"ID":"262","name":"Quiz 2014 - 13","added_on":"2014-03-28 09:24:51","questions":[{"question":"1. Tax revenue provides a national government with non-inflationary spending capacity.","ID":"1190","explanation":"","answers":[{"ID":"6115","answer":"False","correct":"0"},{"ID":"6114","answer":"True","correct":"1"}]},{"question":"2. When there is an external deficit, the private sector can save overall (spend less overall than it earns) as long as the government supports saving by running a deficit.","ID":"1191","explanation":"","answers":[{"ID":"6117","answer":"False","correct":"1"},{"ID":"6116","answer":"True","correct":"0"}]},{"question":"3. When a sovereign government issues debt to match its fiscal deficit, the financial wealth of the non-government increases.","ID":"1192","explanation":"","answers":[{"ID":"6119","answer":"False","correct":"1"},{"ID":"6118","answer":"True","correct":"0"}]}]}, {"ID":"263","name":"Quiz 2014 - 14","added_on":"2014-04-04 18:56:41","questions":[{"question":"1. Recent press reports indicate that the European Central Bank is considering introducing quantitative easing to ease the aggregate demand losses associated with the implementation of fiscal austerity programs as deflation threatens. If calibrated correctly, this strategy will replace the net financial assets destroyed by the fiscal austerity.","ID":"1193","explanation":"","answers":[{"ID":"6127","answer":"False","correct":"1"},{"ID":"6126","answer":"True","correct":"0"}]},{"question":"2. The expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance than if it just instructed the central bank to fund its spending account. This is because debt-issuance drains excess reserves resulting from the deficits and purchasing power is accordingly withdrawn from the monetary system.","ID":"1194","explanation":"","answers":[{"ID":"6129","answer":"False","correct":"1"},{"ID":"6128","answer":"True","correct":"0"}]},{"question":"3. Imagine that the government is choosing between a tax cut that will reduce tax revenue at the current level of national income by $x and a spending increase of $x. Which policy option will have the greater initial impact on aggregate demand?","ID":"1195","explanation":"","answers":[{"ID":"6130","answer":"Tax cut","correct":"0"},{"ID":"6131","answer":"Spending increase","correct":"1"},{"ID":"6132","answer":"Both will be equivalent","correct":"0"},{"ID":"6133","answer":"There is not enough information to answer this question","correct":"0"}]}]}, {"ID":"264","name":"Quiz 2014 - 15","added_on":"2014-04-10 21:22:26","questions":[{"question":"1. Ignoring political reality, the central bank in a currency-issuing nation could still increase interest rates even if the government instructed it to directly purchase treasury debt to facilitate the national governments fiscal deficit.","ID":"1196","explanation":"","answers":[{"ID":"6141","answer":"False","correct":"0"},{"ID":"6140","answer":"True","correct":"1"}]},{"question":"2. If a nation is earning less than it is spending with respect to its transactions with the rest of the world and household saving suddenly increases as a proportion of disposable income, then the government could still run its current surplus without a decline in output and income occurring.","ID":"1197","explanation":"","answers":[{"ID":"6143","answer":"False","correct":"0"},{"ID":"6142","answer":"True","correct":"1"}]},{"question":"3. A continuous fiscal deficit leads to public spending building up and an increase in the inflation risk faced by the economy.","ID":"1198","explanation":"","answers":[{"ID":"6145","answer":"False","correct":"1"},{"ID":"6144","answer":"True","correct":"0"}]}]}, {"ID":"265","name":"Quiz 2014 - 16","added_on":"2014-04-18 08:53:33","questions":[{"question":"1. If austerity led to all national governments simultaneously running public surpluses (which is the aim) then it would be still possible for all their respective private domestic sectors to spend less than they earn depending on the trade outcome.","ID":"1199","explanation":"","answers":[{"ID":"6157","answer":"False","correct":"1"},{"ID":"6156","answer":"True","correct":"0"}]},{"question":"2. A leakage from the spending system can occur via taxation, imports or saving which reduces the expenditure multiplier effect of government spending. Another leakage which reduces the expansionary impact of government deficit spending occurs when the government matches the deficit with debt-issuance, the latter act which drains private sector purchasing power.","ID":"1200","explanation":"","answers":[{"ID":"6153","answer":"False","correct":"1"},{"ID":"6152","answer":"True","correct":"0"}]},{"question":"3. With reserve requirements low or zero, bank lending is capital-constrained rather than reserve constrained. But that would change if, for example, the central bank forced banks to maintain a reserve ratio of 100 per cent.","ID":"1201","explanation":"","answers":[{"ID":"6155","answer":"False","correct":"1"},{"ID":"6154","answer":"True","correct":"0"}]}]}, {"ID":"266","name":"Quiz 2014 - 17","added_on":"2014-04-24 18:11:02","questions":[{"question":"1. Assume that a nation is running an external deficit of 2 per cent of GDP. Under these circumstances, whether the public sector records a deficit or not depends on how large a surplus the private domestic sector records.","ID":"1202","explanation":"","answers":[{"ID":"6171","answer":"False","correct":"1"},{"ID":"6170","answer":"True","correct":"0"}]},{"question":"2. It has been argued that if the fiscal rules in the Eurozone were abandoned, and the automatic stabilisers in the Member-State fiscal positions were allowed to operate unfettered, then they would return the government fiscal balance to its appropriate level once growth returns following a downturn.","ID":"1203","explanation":"","answers":[{"ID":"6167","answer":"False","correct":"1"},{"ID":"6166","answer":"True","correct":"0"}]},{"question":"3. The government has to issue debt if the central bank is targetting a non-zero policy rate and is reluctant to pay a return on excess bank reserves.","ID":"1204","explanation":"","answers":[{"ID":"6169","answer":"False","correct":"0"},{"ID":"6168","answer":"True","correct":"1"}]}]}, {"ID":"267","name":"Quiz 2014 - 18","added_on":"2014-05-02 09:38:56","questions":[{"question":"As long as employment growth keeps pace with labour force growth, unemployment will not rise.","ID":"1205","explanation":"","answers":[{"ID":"6172","answer":"True","correct":"0"},{"ID":"6173","answer":"False","correct":"1"}]},{"question":"The non-government sector is wealthier when the government matches it deficit with new debt issues.","ID":"1206","explanation":"","answers":[{"ID":"6174","answer":"True","correct":"0"},{"ID":"6175","answer":" False","correct":"1"}]},{"question":"3. If net exports are running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must be running:","ID":"1207","explanation":"","answers":[{"ID":"6176","answer":"A surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"6177","answer":"A surplus equal to 5 per cent of GDP.","correct":"0"},{"ID":"6178","answer":"A deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"6179","answer":"A deficit equal to 5 per cent of GDP.","correct":"0"}]}]}, {"ID":"268","name":"Quiz 2014 - 19","added_on":"2014-05-09 08:20:29","questions":[{"question":"1. The public debt ratio is of no concern because economic growth will always bring it down after a recession.","ID":"1208","explanation":"","answers":[{"ID":"6187","answer":"False","correct":"1"},{"ID":"6186","answer":"True","correct":"0"}]},{"question":"2. A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","ID":"1209","explanation":"","answers":[{"ID":"6189","answer":"False","correct":"0"},{"ID":"6188","answer":"True","correct":"1"}]},{"question":"3. It is easier for banks to expand credit to the private sector when bank reserves are rising.","ID":"1210","explanation":"","answers":[{"ID":"6191","answer":"False","correct":"1"},{"ID":"6190","answer":"True ","correct":"0"}]}]}, {"ID":"269","name":"Quiz 2014 - 20","added_on":"2014-05-16 11:46:08","questions":[{"question":"1. The Australian government brought down its fiscal statement (aka "The Budget") this week and estimated that its fiscal deficit would shrink from 3.1 per cent of GDP in 2013-14 to 1.8 per cent of GDP in 2014-15. This signals that the government is intending to adopt a less expansionary fiscal policy strategy in 2014-15 than in the previous fiscal year.","ID":"1211","explanation":"","answers":[{"ID":"6199","answer":"False","correct":"1"},{"ID":"6198","answer":"True","correct":"0"}]},{"question":"2. When the government borrows from the private sector to match an increase in net public spending (its deficit), the resulting increase in aggregate demand coming from the deficit spending is less than would be the case if there was no bond sale because the private sector has less money to spend.","ID":"1212","explanation":"","answers":[{"ID":"6201","answer":"False","correct":"1"},{"ID":"6200","answer":"True ","correct":"0"}]},{"question":"3. If the external sector is generating a large surplus and is thus contributing strongly to growth, then the national government can safely run fiscal surpluses without impeding economic growth.","ID":"1213","explanation":"","answers":[{"ID":"6203","answer":"False","correct":"1"},{"ID":"6202","answer":"True","correct":"0"}]}]}, {"ID":"270","name":"Quiz 2014 - 21","added_on":"2014-05-23 11:57:21","questions":[{"question":"1. Private households, in aggregate, cannot save if a nation"s external sector is in balance (and thus making no contribution to real GDP growth) and the government runs a balanced budget.","ID":"1214","explanation":"","answers":[{"ID":"6211","answer":"False","correct":"1"},{"ID":"6210","answer":"True","correct":"0"}]},{"question":"2. If we observed yields on 10-year government bond yields rising, we could not categorically state that bond markets are demanding increased risk premiums for these assets. ","ID":"1215","explanation":"","answers":[{"ID":"6213","answer":"False","correct":"0"},{"ID":"6212","answer":"True","correct":"1"}]},{"question":"3. Continually expanding the money supply will inevitably be inflationary.","ID":"1216","explanation":"","answers":[{"ID":"6215","answer":"False","correct":"1"},{"ID":"6214","answer":"True","correct":"0"}]}]}, {"ID":"271","name":"Quiz 2014 - 22","added_on":"2014-05-29 22:04:45","questions":[{"question":"1. One of the few advantages of a currency-issuing government issuing bonds to match its deficit spending is that it boosts private sector wealth.","ID":"1217","explanation":"","answers":[{"ID":"6223","answer":"False","correct":"1"},{"ID":"6222","answer":"True","correct":"0"}]},{"question":"2. The stock of government spending continually rises when there are rising fiscal deficits.","ID":"1218","explanation":"","answers":[{"ID":"6225","answer":"False","correct":"1"},{"ID":"6224","answer":"True","correct":"0"}]},{"question":"3. When a government records a budget surplus which means it is withdrawing net purchasing power from the economy and reducing the economic growth rate of the economy, we cannot conclude that it has adopted a policy of austerity.","ID":"1219","explanation":"","answers":[{"ID":"6227","answer":"False","correct":"0"},{"ID":"6226","answer":"True","correct":"1"}]}]}, {"ID":"272","name":"Quiz 2014 - 23","added_on":"2014-06-06 09:54:02","questions":[{"question":"1. Which fiscal deficit outcome (expressed in terms of the scale relative to GDP) is the most expansionary in terms of aggregate demand?","ID":"1220","explanation":"","answers":[{"ID":"6234","answer":"1 per cent of GDP","correct":"0"},{"ID":"6235","answer":"2 per cent of GDP","correct":"0"},{"ID":"6236","answer":"3 per cent of GDP","correct":"1"},{"ID":"6237","answer":"We need to know the structural and automatic stabiliser components before we can answer","correct":"0"}]},{"question":"2. When the government matches its deficit with debt-issuance it changes the portfolio of wealth held in the non-government sector. The impact on purchasing power is equivalent to a leakage from the expenditure system (akin to taxation, saving or imports) which reduces the expansionary impact of the government deficit spending.","ID":"1221","explanation":"","answers":[{"ID":"6239","answer":"False","correct":"1"},{"ID":"6238","answer":"True","correct":"0"}]},{"question":"3. If all national governments simultaneously manage to run public surpluses (a neo-liberal nirvana) then it would still be possible for all their respective private domestic sectors to simultaneously save overall as long as no nation ran an external deficit.","ID":"1222","explanation":"","answers":[{"ID":"6241","answer":"False","correct":"1"},{"ID":"6240","answer":"True","correct":"0"}]}]}, {"ID":"273","name":"Quiz 2014 - 24","added_on":"2014-06-13 08:19:16","questions":[{"question":"1. The distribution of national income has shifted in most advanced nations over the last two decades in favour of profits. This trend will only stabilise if workers can secure wage increases in line with the growth of labour productivity.","ID":"1223","explanation":"","answers":[{"ID":"6249","answer":"False","correct":"1"},{"ID":"6248","answer":"True","correct":"0"}]},{"question":"2. The real spending capacity of a currency-issuing government is constrained by the tax revenue it generates.","ID":"1224","explanation":"","answers":[{"ID":"6251","answer":"False","correct":"0"},{"ID":"6250","answer":"True","correct":"1"}]},{"question":"3. Under current public sector debt-issuance arrangements (where sovereign governments match their deficits with issues of debt), the government and the private domestic sectors can simultaneously reduce their debt levels.","ID":"1225","explanation":"","answers":[{"ID":"6253","answer":"False","correct":"0"},{"ID":"6252","answer":"True ","correct":"1"}]}]}, {"ID":"274","name":"Quiz 2014 - 25","added_on":"2014-06-20 07:21:43","questions":[{"question":"1. Bank lending moved from being reserve-constrained to capital-constrained once the prudential authorities relaxed reserve ratio requirements and the Bank of International Settlements introduced the Basel framework for capital adequacy.","ID":"1226","explanation":"","answers":[{"ID":"6261","answer":"False","correct":"1"},{"ID":"6260","answer":"True","correct":"0"}]},{"question":"2. A central bank cannot simultaneously reduce bank lending and maintain a given positive target interest rate by increasing the rate at which it provides reserves on demand to the commercial banks.","ID":"1227","explanation":"","answers":[{"ID":"6263","answer":"False","correct":"0"},{"ID":"6262","answer":"True","correct":"1"}]},{"question":"3. For a nation running a small current account deficit, the government fiscal balance will always be in deficit if the domestic private sector is spending less than it earns.","ID":"1228","explanation":"","answers":[{"ID":"6265","answer":"False","correct":"0"},{"ID":"6264","answer":"True","correct":"1"}]}]}, {"ID":"275","name":"Quiz 2014 - 26","added_on":"2014-06-27 07:59:35","questions":[{"question":"1. The automatic stabilisers built into the fiscal framework always work in a counter-cyclical fashion and if not unencumbered by discretionary policy changes, such as fiscal austerity, will eventually ensure that the government fiscal balance returns to its appropriate level.","ID":"1229","explanation":"","answers":[{"ID":"6273","answer":"False","correct":"1"},{"ID":"6272","answer":"True","correct":"0"}]},{"question":"2. The decision by the government to issue debt to the non-government sector to match its fiscal deficit instead of selling the same debt to the central bank:","ID":"1230","explanation":"","answers":[{"ID":"6274","answer":"increases the financial assets (the bonds) that are held by the non-government sector $-for-$.","correct":"0"},{"ID":"6275","answer":"has no impact on the overall holdings of financial assets held by the non-government sector $-for-$.","correct":"1"},{"ID":"6276","answer":"reduces the capacity of the non-government sector to borrow from banks by draining bank reserves in return for the bonds.","correct":"0"}]},{"question":"3. The ability of a central bank to target a positive interest rate as an expression of its monetary policy stance is independent of the volume of debt it might purchase from the treasury (via primary issue) to match the government"s fiscal deficit.","ID":"1231","explanation":"","answers":[{"ID":"6280","answer":"False","correct":"1"},{"ID":"6279","answer":"True","correct":"0"}]}]}, {"ID":"276","name":"Quiz 2014 - 27","added_on":"2014-07-03 20:43:13","questions":[{"question":"1. If the inflation rate is steady and the central bank maintains a constant nominal interest rate, then under current institutional arrangements where governments match deficit spending with debt issuance to the private sector, the public debt ratio will rise if the government deficit doubles (say, from 2 to 4 per cent of GDP).","ID":"1232","explanation":"","answers":[{"ID":"6281","answer":"True","correct":"0"},{"ID":"6282","answer":"False","correct":"1"}]},{"question":"2. The real material living standards of workers are systematically eroded when the wage share in national income declines in favour of a higher profit share.","ID":"1233","explanation":"","answers":[{"ID":"6283","answer":"True","correct":"0"},{"ID":"6284","answer":"False","correct":"1"}]},{"question":"3. Suppose that the government announced as part of a fiscal austerity strategy that it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. In that situation we would not be able to conclude that the fiscal austerity plans would undermine growth if the net export projection was realised.","ID":"1234","explanation":"","answers":[{"ID":"6285","answer":"True","correct":"1"},{"ID":"6286","answer":"False","correct":"0"}]}]}, {"ID":"277","name":"Quiz 2014 - 28","added_on":"2014-07-11 10:13:30","questions":[{"question":"1. Over a given business 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:","ID":"1235","explanation":"","answers":[{"ID":"6293","answer":"Deficit of 1 per cent of GDP","correct":"1"},{"ID":"6294","answer":"Surplus of 1 per cent of GDP","correct":"0"}]},{"question":"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.","ID":"1236","explanation":"","answers":[{"ID":"6296","answer":"False","correct":"0"},{"ID":"6295","answer":"True","correct":"1"}]},{"question":"3. During a recession, if the government uses expansionary fiscal policy to restore trend real GDP growth it will restore full employment.","ID":"1237","explanation":"","answers":[{"ID":"6298","answer":"False","correct":"1"},{"ID":"6297","answer":"True","correct":"0"}]}]}, {"ID":"278","name":"Quiz 2014 - 29","added_on":"2014-07-17 21:13:14","questions":[{"question":"1. Modern Monetary Theory teaches us that one of the dangers of public spending is that it can crowd out private spending.","ID":"1238","explanation":"","answers":[{"ID":"6310","answer":"False","correct":"0"},{"ID":"6309","answer":"True","correct":"1"}]},{"question":"2 National accounting shows us that a government surplus equals a non-government deficit. But that doesn"t mean that if fiscal austerity ends up generating a fiscal surpluses that households and firms taken together will be running deficits.","ID":"1239","explanation":"","answers":[{"ID":"6308","answer":"False","correct":"0"},{"ID":"6307","answer":"True","correct":"1"}]},{"question":"3. The payment of a positive interest return by the central bank on overnight bank reserves does not eliminate the need for it to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements). ","ID":"1240","explanation":"","answers":[{"ID":"6312","answer":"False","correct":"0"},{"ID":"6311","answer":"True","correct":"1"}]}]}, {"ID":"279","name":"Quiz 2014 - 30","added_on":"2014-07-25 09:09:48","questions":[{"question":"1. A nation that issues its own currency and floats it on international foreign exchange markets can never be financially insolvent with respect to the debt it issues.","ID":"1241","explanation":"","answers":[{"ID":"6322","answer":"False","correct":"1"},{"ID":"6321","answer":"True","correct":"0"}]},{"question":"2. Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP minus the changes in the monetary base arising from official foreign exchange transactions conducted by the central bank.","ID":"1242","explanation":"","answers":[{"ID":"6324","answer":"False","correct":"1"},{"ID":"6323","answer":"True","correct":"0"}]},{"question":"3. As a matter of accounting, the financial assets held by the non-government sector rise $-for-$ when a sovereign government issues debt.","ID":"1243","explanation":"","answers":[{"ID":"6328","answer":"False","correct":"1"},{"ID":"6327","answer":"True","correct":"0"}]}]}, {"ID":"280","name":"Quiz 2014 - 31","added_on":"2014-07-31 22:00:26","questions":[{"question":"1. The Australian government has just introduced harsh new measures against the unemployed. The government is exploiting the popular view that the unemployed on income support benefits live off the hard work of those who pay taxes. The popular view has validity.","ID":"1244","explanation":"","answers":[{"ID":"6329","answer":"True","correct":"1"},{"ID":"6330","answer":"False","correct":"0"}]},{"question":"2. A potential problem with running continuous fiscal deficits is that the spending builds up over time which adds to inflationary pressures.","ID":"1245","explanation":"","answers":[{"ID":"6331","answer":"True","correct":"0"},{"ID":"6332","answer":"False","correct":"1"}]},{"question":"3. If private domestic investment is less than private domestic saving and the external sector is draining aggregate demand then the government fiscal balance has to be in deficit no matter what level of GDP is produced.","ID":"1246","explanation":"","answers":[{"ID":"6333","answer":"True","correct":"1"},{"ID":"6334","answer":"False","correct":"0"}]}]}, {"ID":"281","name":"Quiz 2014 - 32","added_on":"2014-08-08 09:43:36","questions":[{"question":"1. The private domestic sector of the economy can save overall, as long as the net exports are positive.","ID":"1247","explanation":"","answers":[{"ID":"6342","answer":"False","correct":"1"},{"ID":"6341","answer":"True","correct":"0"}]},{"question":"2. The payment to the private banks on reserves they hold with the central bank reduces their incentive to advance credit to the private sector.","ID":"1248","explanation":"","answers":[{"ID":"6344","answer":"False","correct":"1"},{"ID":"6343","answer":"True","correct":"0"}]},{"question":"3. A country can only start to reduce its public debt relative to GDP when the government can run primary fiscal surpluses (that is, government spending net of interest payments on debt is less than taxation).","ID":"1249","explanation":"","answers":[{"ID":"6346","answer":"False","correct":"1"},{"ID":"6345","answer":"True","correct":"0"}]}]}, {"ID":"282","name":"Quiz 2014 - 33","added_on":"2014-08-15 08:54:49","questions":[{"question":"1. A currency-issuing government can always ensure there is first-class services to meet the demands of an ageing population","ID":"1251","explanation":"","answers":[{"ID":"6356","answer":"False","correct":"1"},{"ID":"6355","answer":"True","correct":"0"}]},{"question":"2. For a nation running a very small current account deficit (close to balance), the government fiscal balance will always be in deficit if the domestic private sector is spending less than it earns.","ID":"1252","explanation":"","answers":[{"ID":"6362","answer":"False","correct":"0"},{"ID":"6361","answer":"True","correct":"1"}]},{"question":"3. Ignoring laws to the contrary, a central bank currently targetting a 2 per cent short-term policy rate, cannot directly purchase treasury debt to facilitate the national governments fiscal deficit (that is, \\\"monetise the deficit\\\") and continue to maintain its policy rate at 2 per cent.","ID":"1253","explanation":"","answers":[{"ID":"6364","answer":"False","correct":"1"},{"ID":"6363","answer":"True","correct":"0"}]}]}, {"ID":"283","name":"Quiz 2014 - 34","added_on":"2014-08-21 21:42:22","questions":[{"question":"1. A nation can run a government sector surplus, which is larger as a proportion to GDP than the external deficit, while the private domestic sector is spending more than they are earning.","ID":"1254","explanation":"","answers":[{"ID":"6376","answer":"False","correct":"0"},{"ID":"6375","answer":"True","correct":"1"}]},{"question":"2. The automatic stabilisers built into national government fiscal policy always operate in a counter-cyclical manner.","ID":"1255","explanation":"","answers":[{"ID":"6372","answer":"False","correct":"0"},{"ID":"6371","answer":"True","correct":"1"}]},{"question":"3. Sovereign government spending becomes more costly when the bond markets push yields on new public bond issues up.","ID":"1256","explanation":"","answers":[{"ID":"6374","answer":"False","correct":"1"},{"ID":"6373","answer":"True","correct":"0"}]}]}, {"ID":"284","name":"Quiz 2014 - 35","added_on":"2014-08-28 20:36:41","questions":[{"question":"1. If inflation is maintained at a rate equal to the interest rate, then the government deficit as a proportion of GDP could double (say from 2 to 4 per cent) without pushing up the public debt ratio.","ID":"1257","explanation":"","answers":[{"ID":"6384","answer":"False","correct":"0"},{"ID":"6383","answer":"True","correct":"1"}]},{"question":"2. The Eurozone recovery strategy for Greece and other nations is relying on a export boom, to replace the lost spending arising from the fiscal austerity. Even if net exports turn positive and more than offset the loss of government net spending, there is no guarantee that the Greek economy will resume growth.","ID":"1258","explanation":"","answers":[{"ID":"6386","answer":"False","correct":"0"},{"ID":"6385","answer":"True","correct":"1"}]},{"question":"3. A falling wage share in national income, which has been a characteristic trend in many nations over the neo-liberal period, does not guarantee declining real standards of living for workers.","ID":"1259","explanation":"","answers":[{"ID":"6388","answer":"False","correct":"0"},{"ID":"6387","answer":"True","correct":"1"}]}]}, {"ID":"285","name":"Quiz 2014 - 36","added_on":"2014-09-05 08:30:21","questions":[{"question":"1. A rising fiscal surplus tells us that the government is imposing austerity on the economy. ","ID":"1260","explanation":"","answers":[{"ID":"6396","answer":"False","correct":"1"},{"ID":"6395","answer":"True","correct":"0"}]},{"question":"2. If the household saving ratio rises and there is an external deficit then government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"1261","explanation":"","answers":[{"ID":"6408","answer":"False","correct":"1"},{"ID":"6407","answer":"True","correct":"0"}]},{"question":"3. Real government spending can be higher if the government can raise more tax revenue by increasing tax rates.","ID":"1262","explanation":"","answers":[{"ID":"6406","answer":"False","correct":"0"},{"ID":"6405","answer":"True","correct":"1"}]}]}, {"ID":"286","name":"Quiz 2014 - 37","added_on":"2014-09-11 18:14:33","questions":[{"question":"1. Modern Monetary Theory accepts the proposition that if the central bank continually expands the monetary base then there will inevitably be an accelerating inflation.","ID":"1263","explanation":"","answers":[{"ID":"6416","answer":"False","correct":"1"},{"ID":"6415","answer":"True","correct":"0"}]},{"question":"2. If there is an external deficit of 2 per cent of GDP and the government balances its fiscal position then private capital formation:","ID":"1264","explanation":"","answers":[{"ID":"6424","answer":"Cannot really tell definitively without further information.","correct":"0"},{"ID":"6423","answer":"will be less than private domestic saving by a margin equal to 2 per cent of GDP.","correct":"0"},{"ID":"6422","answer":" will outstrip private domestic saving by a margin equal to 2 per cent of GDP.","correct":"1"}]},{"question":"3. While a currency-issuing government does not need to issue to debt in order to raise funds prior to spending, one effect of draining funds out of the system by borrowing from the private sector is that it reduces the risk that public spending will overheat the economy.","ID":"1265","explanation":"","answers":[{"ID":"6421","answer":"False","correct":"1"},{"ID":"6420","answer":"True","correct":"0"}]}]}, {"ID":"287","name":"Quiz 2014 - 38","added_on":"2014-09-19 07:32:53","questions":[{"question":"1. This week the OECD revised its real GDP growth forecasts for the Euro area and now expects it to grow by 0.8 per cent in 2014 and 1.1 per cent in 2015. They also predicted that the Euro area unemployment rate would fall from 11.7 per cent in 2014 to 11.4 per cent in 2015. Additionally, they suggested that average annual growth in labour productivity was running at just over 1 per cent per annum (GDP per hours worked). If average weekly hours worked remains constant over 2015, then the implication of the OECD forecasts is that they think the Euro area labour force will:","ID":"1266","explanation":"","answers":[{"ID":"6434","answer":"shrink by 0.2 per cent","correct":"1"},{"ID":"6433","answer":"grow by 0.2 per cent","correct":"0"},{"ID":"6435","answer":"grow by 0.1 per cent","correct":"0"},{"ID":"6436","answer":"shrink by 0.1 per cent","correct":"0"}]},{"question":"2. If the stock of aggregate demand growth outstrips the capacity of the productive sector to respond by producing extra real goods and services then inflation is inevitable.","ID":"1267","explanation":"","answers":[{"ID":"6438","answer":"False","correct":"1"},{"ID":"6437","answer":"True","correct":"0"}]},{"question":"3. National accounting shows us that a government surplus equals a non-government deficit. If a government is successful in achieving a fiscal surplus then the private domestic sector will become more indebted as a consequence which means that austerity amounts to swapping public for private debt.","ID":"1268","explanation":"","answers":[{"ID":"6440","answer":"False","correct":"1"},{"ID":"6439","answer":"True","correct":"0"}]}]}, {"ID":"288","name":"Quiz 2014 - 39","added_on":"2014-09-25 16:35:05","questions":[{"question":"1. When there is an external deficit, the private sector can reduce its overall indebtedness as long as the government supports private saving by running a deficit.","ID":"1269","explanation":"","answers":[{"ID":"6448","answer":"False","correct":"1"},{"ID":"6447","answer":"True","correct":"0"}]},{"question":"2. When a sovereign government issues debt it has no impact on the overall holdings of financial assets held by the non-government sector.","ID":"1270","explanation":"","answers":[{"ID":"6450","answer":"False","correct":"0"},{"ID":"6449","answer":"True","correct":"1"}]},{"question":"3. Rising 10-year government bond yields tell us that private bond markets are demanding increased risk coverage for these assets.","ID":"1271","explanation":"","answers":[{"ID":"6452","answer":"False","correct":"1"},{"ID":"6451","answer":"True","correct":"0"}]}]}, {"ID":"289","name":"Quiz 2014 - 40","added_on":"2014-10-02 21:38:46","questions":[{"question":"1. Modern Monetary Theory (MMT) teaches us that a sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues:","ID":"1272","explanation":"","answers":[{"ID":"6459","answer":"the less is the volume of investment funds in the non-government sector that can be used for other investments.","correct":"0"},{"ID":"6460","answer":"the greater is non-government wealth held in the form of public debt.","correct":"1"},{"ID":"6461","answer":"the more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"}]},{"question":"2. A fiscal surplus indicates that the national government is","ID":"1273","explanation":"","answers":[{"ID":"6462","answer":"trying to slow the economy down and contain inflation.","correct":"0"},{"ID":"6463","answer":"trying to reduce public debt","correct":"0"},{"ID":"6464","answer":"you cannot conclude anything about the government"s policy intentions","correct":"1"}]},{"question":"3. A currency-issuing government can run a balanced fiscal balance over the business cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will only be in surplus if the external balance is in surplus.","ID":"1274","explanation":"","answers":[{"ID":"6468","answer":"False","correct":"0"},{"ID":"6467","answer":"True","correct":"1"}]}]}, {"ID":"290","name":"Quiz 2014 - 41","added_on":"2014-10-09 20:54:11","questions":[{"question":"1. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP) - a nation can run a current account deficit accompanied by a government sector surplus:","ID":"1275","explanation":"","answers":[{"ID":"6479","answer":"of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"6480","answer":"of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"6481","answer":"that is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"6482","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]},{"question":"2. The total stock of public debt as a percentage of Gross Domestic Product (the so-called public debt ratio) is of no concern because it falls once economic growth resumes.","ID":"1276","explanation":"","answers":[{"ID":"6476","answer":"False","correct":"1"},{"ID":"6475","answer":"True","correct":"0"}]},{"question":"3. The expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance compared to a situation when it issued no debt.","ID":"1277","explanation":"","answers":[{"ID":"6478","answer":"False","correct":"1"},{"ID":"6477","answer":"True","correct":"0"}]}]}, {"ID":"291","name":"Quiz 2014 - 42","added_on":"2014-10-16 18:39:10","questions":[{"question":"1. While bank lending is capital constrained a further constraint on excess lending would be created by regulators if a 100 per cent reserve ratio (that is, all loans had to be backed by reserves) was imposed.","ID":"1278","explanation":"","answers":[{"ID":"6500","answer":"False","correct":"1"},{"ID":"6499","answer":"True","correct":"0"}]},{"question":"2. Assume that the national accounts of a nation is reveal that its external surplus is equivalent to 2 per cent of GDP and the private domestic sector is saving overall 3 per cent of GDP. We would also observe:","ID":"1279","explanation":"","answers":[{"ID":"6504","answer":"A fiscal surplus equal to 5 per cent of GDP.","correct":"0"},{"ID":"6503","answer":"A fiscal deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"6502","answer":"A fiscal surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"6501","answer":"A fiscal deficit equal to 1 per cent of GDP.","correct":"1"}]},{"question":"3. Assume the current public debt to GDP ratio is 100 per cent and that the nominal interest rate and the inflation rate remain constant and zero. Under these circumstances it is impossible to reduce a public debt to GDP ratio, using an austerity package if the rise in the primary surplus to GDP ratio is always exactly offset by negative GDP growth rate of the same percentage value.","ID":"1280","explanation":"","answers":[{"ID":"6498","answer":"False","correct":"0"},{"ID":"6497","answer":"True","correct":"1"}]}]}, {"ID":"292","name":"Quiz 2014 - 43","added_on":"2014-10-23 03:55:28","questions":[{"question":"1. Conservatives have criticised several governments (such as in France and Italy) for not pursuing fiscal austerity programs with sufficient commitment. The fact that these government fiscal deficits continue to increase is evidence of this lack of commitment.","ID":"1281","explanation":"","answers":[{"ID":"6512","answer":"False","correct":"1"},{"ID":"6511","answer":"True","correct":"0"}]},{"question":"2. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would find:","ID":"1282","explanation":"","answers":[{"ID":"6513","answer":"Fiscal deficit","correct":"1"},{"ID":"6514","answer":"Fiscal surplus","correct":"0"},{"ID":"6515","answer":"Cannot determine because we would need to know the scale of the private domestic sector saving as a % of GDP.","correct":"0"}]},{"question":"3. The net worth of the non government sector rises if the government issues bonds to match its deficit spending.","ID":"1283","explanation":"","answers":[{"ID":"6517","answer":"False","correct":"1"},{"ID":"6516","answer":"True","correct":"0"}]}]}, {"ID":"293","name":"Quiz 2014 - 44","added_on":"2014-10-30 18:39:52","questions":[{"question":"1. A declining budget deficit tells us that the government is pursuing a more contractionary fiscal policy stance.","ID":"1284","explanation":"","answers":[{"ID":"6529","answer":"False","correct":"1"},{"ID":"6528","answer":"True","correct":"0"},{"ID":"6530","answer":"Cannot tell as we need more information on what the external sector is doing.","correct":"0"}]},{"question":"2. If the household saving ratio rises and there is an external deficit then government must increase its fiscal deficit to fill the private spending gap or else national output and income will fall.","ID":"1285","explanation":"","answers":[{"ID":"6527","answer":"False","correct":"1"},{"ID":"6526","answer":"True","correct":"0"}]},{"question":"3. When a currency-issuing government voluntarily constrains itself to borrow from the private sector to cover its net spending (deficits) position, it substitutes public spending for the borrowed private funds and reduces the funds available for private sector borrowing.","ID":"1286","explanation":"","answers":[{"ID":"6525","answer":"False","correct":"1"},{"ID":"6524","answer":"True","correct":"0"}]}]}, {"ID":"294","name":"Quiz 2014 - 45","added_on":"2014-11-05 18:22:46","questions":[{"question":"1. If there is an external deficit of 2 per cent of GDP and the government balances its fiscal position then the private sector will have a an excess of spending relative to its income equal to 2 per cent of GDP.","ID":"1287","explanation":"","answers":[{"ID":"6538","answer":"False","correct":"0"},{"ID":"6537","answer":"True","correct":"1"}]},{"question":"2. By draining funds out of the system, government borrowing from the private sector reduces the risk that public deficit spending will overheat the economy.","ID":"1288","explanation":"","answers":[{"ID":"6540","answer":"False","correct":"1"},{"ID":"6539","answer":"True","correct":"0"}]},{"question":"3. Even Modern Monetary Theory (MMT) accepts the proposition that continually expanding the money supply will inevitably be inflationary. ","ID":"1289","explanation":"","answers":[{"ID":"6542","answer":"False","correct":"1"},{"ID":"6541","answer":"True","correct":"0"}]}]}, {"ID":"295","name":"Quiz 2014 - 46","added_on":"2014-11-13 18:18:35","questions":[{"question":"1. During a recession, a government should use expansionary fiscal policy to restore trend real GDP growth if it wants to reduce unemployment rate.","ID":"1290","explanation":"","answers":[{"ID":"6556","answer":"False","correct":"1"},{"ID":"6555","answer":"True","correct":"0"}]},{"question":"2. The current period is marked by private households increasing their saving ratios (from disposable income) and firms declining to invest. These trends indicate that fiscal deficits have to be higher to avoid further employment losses.","ID":"1291","explanation":"","answers":[{"ID":"6558","answer":"False","correct":"1"},{"ID":"6557","answer":"True","correct":"0"}]},{"question":"3. If the external sector is accumulating financial claims on the local economy and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can run surpluses without damaging employment growth.","ID":"1292","explanation":"","answers":[{"ID":"6562","answer":"False","correct":"1"},{"ID":"6561","answer":"True","correct":"0"}]}]}, {"ID":"296","name":"Quiz 2014 - 47","added_on":"2014-11-13 18:20:07","questions":[{"question":"1. As a matter of accounting, the financial assets held by the non-government sector rise $-for-$ when a sovereign government issues debt to match its current fiscal deficit.","ID":"1293","explanation":"","answers":[{"ID":"6566","answer":"False","correct":"0"},{"ID":"6565","answer":"True","correct":"1"}]},{"question":"2. When government bond yields for new issues start to rise, government spending becomes more expensive.","ID":"1294","explanation":"","answers":[{"ID":"6572","answer":"False","correct":"1"},{"ID":"6571","answer":"True","correct":"0"}]},{"question":"3. Open market operations as a means of ensuring that levels of bank reserves are consistent with the monetary policy target become redundant whenever the central bank pays a positive interest rate on overnight reserves held by the commercial banks (ignore any reserve requirements in place when answering).","ID":"1295","explanation":"","answers":[{"ID":"6570","answer":"False","correct":"1"},{"ID":"6569","answer":"True","correct":"0"}]}]}, {"ID":"297","name":"Quiz 2014 - 48","added_on":"2014-11-27 02:07:28","questions":[{"question":"1. Real wages are falling in many economies as a result of austerity measures because the rate of growth in earnings has fallen behind the growth in labour productivity.","ID":"1296","explanation":"","answers":[{"ID":"6580","answer":"False","correct":"1"},{"ID":"6579","answer":"True","correct":"0"}]},{"question":"2. The increasing French government fiscal deficit is evidence that it has not pursued the European Commission"s austerity program with sufficient commitment.","ID":"1297","explanation":"","answers":[{"ID":"6587","answer":"False","correct":"1"},{"ID":"6586","answer":"True","correct":"0"}]},{"question":"3. In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The government"s fiscal balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 3 per cent. In Year 2, the government stimulates the economy and pushes the primary fiscal deficit out to 2 per cent of GDP and in doing so stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio will rise but by an amount less than the rise in the fiscal deficit because of the real growth in the economy.","ID":"1298","explanation":"","answers":[{"ID":"6584","answer":"False","correct":"0"},{"ID":"6583","answer":"True","correct":"0"},{"ID":"6585","answer":"Impossible to determine given the facts","correct":"1"}]}]}, {"ID":"298","name":"Quiz 2014 - 49","added_on":"2014-12-05 02:20:22","questions":[{"question":"1. Like anything in abundance, the value of \\\"money\\\" declines when their is more of it in the economy.","ID":"1299","explanation":"","answers":[{"ID":"6605","answer":"False","correct":"1"},{"ID":"6604","answer":"True","correct":"0"}]},{"question":"2. The imposition of a fiscal rule at the national government level its fiscal balance is required to be in balance at all times would eliminate swings in the balance driven by the automatic stabilisers.","ID":"1300","explanation":"","answers":[{"ID":"6607","answer":"False","correct":"1"},{"ID":"6606","answer":"True","correct":"0"}]},{"question":"3. The private domestic sector can save overall even with a government fiscal surplus as long as net exports are positive.","ID":"1301","explanation":"","answers":[{"ID":"6603","answer":"False","correct":"0"},{"ID":"6602","answer":"True","correct":"1"}]}]}, {"ID":"299","name":"Quiz 2014 - 50","added_on":"2014-12-11 03:37:40","questions":[{"question":"1. If Italy, which currently faces insolvency risk on its outstanding public debt, was to leave the Eurozone, re-introduce the lira, and re-denominate all euro liabilities into the new currency, then they would eliminate that risk on all future liabilities.","ID":"1302","explanation":"","answers":[{"ID":"6615","answer":"False","correct":"1"},{"ID":"6614","answer":"True","correct":"0"}]},{"question":"2. Accumulating fiscal surpluses driven by large external surpluses in a sovereign fund allows a government more non-inflationary spending space in the future with lower taxes once the resource wealth dissipates and the external sector moves into deficit.","ID":"1303","explanation":"","answers":[{"ID":"6617","answer":"False","correct":"1"},{"ID":"6616","answer":"True","correct":"0"}]},{"question":"3. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):n","ID":"1304","explanation":"","answers":[{"ID":"6633","answer":"(d)","correct":"0"},{"ID":"6632","answer":"(c)","correct":"0"},{"ID":"6631","answer":"(b)","correct":"1"},{"ID":"6630","answer":"(a)","correct":"0"}]}]}, {"ID":"300","name":"Quiz 2014 - 51","added_on":"2014-12-17 20:10:22","questions":[{"question":"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 you can conclude that National income also rises and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","ID":"1305","explanation":"","answers":[{"ID":"6641","answer":"False","correct":"0"},{"ID":"6640","answer":"True","correct":"1"}]},{"question":"2. Private sector wealth is invariant to the decision by government to issue bonds to the non-government sector to match its deficit spending as against not issuing any bonds.","ID":"1306","explanation":"","answers":[{"ID":"6643","answer":"False","correct":"0"},{"ID":"6642","answer":"True","correct":"1"}]},{"question":"3. When a government records a fiscal surplus, which means it is withdrawing more purchasing power from the economy than it is adding, we know that it is seeking to attenuate the growth in aggregate demand.","ID":"1307","explanation":"","answers":[{"ID":"6645","answer":"False","correct":"1"},{"ID":"6644","answer":"True","correct":"0"}]}]}, {"ID":"301","name":"Quiz 2014 - 52","added_on":"2014-12-25 05:49:19","questions":[{"question":"1. Which fiscal deficit outcome is the least expansionary in terms of its impact on real GDP growth?","ID":"1308","explanation":"","answers":[{"ID":"6656","answer":"1 per cent of GDP","correct":"1"},{"ID":"6657","answer":"2 per cent of GDP","correct":"0"},{"ID":"6658","answer":"3 per cent of GDP","correct":"0"},{"ID":"6659","answer":"Cannot say because it depends on the decomposition of the structural and automatic stabiliser components.","correct":"0"}]},{"question":"2. When the government matches its deficit with debt-issuance it changes the portfolio of wealth held in the non-government sector and the impact on purchasing power is equivalent to a leakage from the expenditure system (akin to taxation, saving or imports) which reduces the expansionary impact of the government deficit spending.","ID":"1309","explanation":"","answers":[{"ID":"6655","answer":"False","correct":"1"},{"ID":"6654","answer":"True","correct":"0"}]},{"question":"3. If the government reduces its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"1310","explanation":"","answers":[{"ID":"6653","answer":"False","correct":"1"},{"ID":"6652","answer":"True","correct":"0"}]}]}, {"ID":"302","name":"Quiz 2015 - 01","added_on":"2015-01-02 00:41:31","questions":[{"question":"1. Automatic stabilisers refer to movements in the fiscal aggregates (spending and taxation), which are sensitive to the cycle in economic activity. In general, the estimates provided by the organisations such as the OECD and IMF of the impact of the automatic stabilisers are biased upwards.","ID":"1311","explanation":"","answers":[{"ID":"6667","answer":"False","correct":"1"},{"ID":"6666","answer":"True","correct":"0"}]},{"question":"2. If there is an external deficit, efforts by the private domestic sector to increase its overall saving as a percentage of GDP, will ensure the government fiscal position is in deficit, irrespective of what the government desires.","ID":"1312","explanation":"","answers":[{"ID":"6669","answer":"False","correct":"0"},{"ID":"6668","answer":"True","correct":"1"}]},{"question":"3. When a government runs a continuous fiscal deficit, public spending builds up over time.","ID":"1313","explanation":"","answers":[{"ID":"6671","answer":"False","correct":"1"},{"ID":"6670","answer":"True","correct":"0"}]}]}, {"ID":"303","name":"Quiz 2015 - 02","added_on":"2015-01-08 02:02:57","questions":[{"question":"1. A currency-issuing government can always ensure there are first-class services to meet the demands of an ageing population if it has the political will.","ID":"1314","explanation":"","answers":[{"ID":"6697","answer":"False","correct":"1"},{"ID":"6696","answer":"True","correct":"0"}]},{"question":"2. If banks are required to maintain 100 per cent reserve requirements (must have cash reserves to back deposits at all times), then the central bank is able to control the money supply.","ID":"1315","explanation":"","answers":[{"ID":"6699","answer":"False","correct":"1"},{"ID":"6698","answer":"True","correct":"0"}]},{"question":"3. For a nation running a small current account deficit (close to balance), the government fiscal balance will always be in deficit if the domestic private sector is spending less than it earns.","ID":"1316","explanation":"","answers":[{"ID":"6701","answer":"False","correct":"0"},{"ID":"6700","answer":"True","correct":"1"}]}]}, {"ID":"304","name":"Quiz 2015 - 03","added_on":"2015-01-08 02:04:43","questions":[{"question":"1. Over a given economic cycle (peak to peak), if a nation"s external sector is on average balanced and the government surplus of tax revenue over its 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:nn","ID":"1317","explanation":"","answers":[{"ID":"6702","answer":"Deficit of 1 per cent of GDP","correct":"1"},{"ID":"6703","answer":"Surplus of 1 per cent of GDP","correct":"0"}]},{"question":"2. The immediate expansionary impact of a tax cut, designed to generate $x revenue at the current level of national income, will be less than an increase of public spending cut of $x.","ID":"1318","explanation":"","answers":[{"ID":"6705","answer":"False","correct":"0"},{"ID":"6704","answer":"True","correct":"1"}]},{"question":"3. If the external sector is accumulating financial claims on the local economy (that is, providing foreign savings to the domestic economy) and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can run surpluses without damaging employment growth.","ID":"1319","explanation":"","answers":[{"ID":"6707","answer":"False","correct":"1"},{"ID":"6706","answer":"True","correct":"0"}]}]}, {"ID":"305","name":"Quiz 2015 - 04","added_on":"2015-01-08 02:06:22","questions":[{"question":"1. Assume a nation is running an external surplus equivalent to 2 per cent of GDP and the government manages to run a fiscal surplus equivalent to 1 per cent of GDP. The national income changes associated with these balances would ensure that the private domestic sector was running an overall deficit of 1 per cent of GDP.","ID":"1320","explanation":"","answers":[{"ID":"6715","answer":"False","correct":"1"},{"ID":"6714","answer":"True","correct":"0"}]},{"question":"2. Starting from the external situation in Question 1, with the surplus being the equivalent of 2 per cent of GDP but this time the fiscal surplus is currently 2 per cent of GDP. If the fiscal balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then you can conclude that national income also rises and the private surplus moves from minus 2 per cent of GDP to plus 2 per cent of GDP.","ID":"1321","explanation":"","answers":[{"ID":"6717","answer":"False","correct":"1"},{"ID":"6716","answer":"True","correct":"0"}]},{"question":"3. Even a sovereign, currency-issuing government has to receive tax dollars from the non-government at times in order to to spend effectively.","ID":"1322","explanation":"","answers":[{"ID":"6709","answer":"False","correct":"0"},{"ID":"6708","answer":"True","correct":"1"}]}]}, {"ID":"306","name":"Quiz 2015 - 05","added_on":"2015-01-08 02:07:42","questions":[{"question":"1. Although we know that a country is running a small current account deficit and that the private domestic sector is saving overall, we are unable to draw any conclusions about the state of the fiscal balance until we know the relative magnitudes of the other balances. ","ID":"1323","explanation":"","answers":[{"ID":"6719","answer":"False","correct":"1"},{"ID":"6718","answer":"True","correct":"0"}]},{"question":"2. A currency-issuing government does not have to issue bonds to match its deficit spending. One of the problems of issuing debt to the non-government sector, as opposed to funding the spending via central bank credit, is that it is a form of corporate welfare because it boosts private wealth.","ID":"1324","explanation":"","answers":[{"ID":"6721","answer":"False","correct":"1"},{"ID":"6720","answer":"True","correct":"0"}]},{"question":"3. A rising fiscal surplus, which means the government is increasingly withdrawing more purchasing power from the economy than it is adding, signals that discretionary fiscal policy is contractionary (aiming to reduce total economic activity).","ID":"1325","explanation":"","answers":[{"ID":"6723","answer":"False","correct":"1"},{"ID":"6722","answer":"True","correct":"0"}]}]}, {"ID":"307","name":"Quiz 2015 - 06","added_on":"2015-02-05 17:12:57","questions":[{"question":"1. Whenever there is an external sector deficit, which is draining overall spending in the domestic economy, the private domestic sector (households and firms) can only save overall if the government sector runs a deficit or balances its fiscal position.n","ID":"1326","explanation":"","answers":[{"ID":"6737","answer":"False","correct":"1"},{"ID":"6736","answer":"True","correct":"0"}]},{"question":"2. The debt issued by a currency-issuing government in its own currency is not really a liability because the government can just roll it over continuously and thus they never have to pay it back. This is different to a household, which not only has to service its debt but also has to repay them at the due date.","ID":"1327","explanation":"","answers":[{"ID":"6741","answer":"False","correct":"1"},{"ID":"6740","answer":"True","correct":"0"}]},{"question":"3. The Greek crisis would be significantly eased if it could improve its tax collection arrangements to ensure that it had more financing available to cover its spending.","ID":"1328","explanation":"","answers":[{"ID":"6735","answer":"False","correct":"0"},{"ID":"6734","answer":"True","correct":"1"}]}]}, {"ID":"308","name":"Quiz 2015 - 07","added_on":"2015-02-12 18:20:34","questions":[{"question":"1. One important lesson to be drawn from Modern Monetary Theory (MMT), which is overlooked in the public call for austerity programs, is that when economic growth resumes, the automatic stabilisers work in a counter-cyclical fashion and ensure that the government fiscal balance returns to its appropriate level.","ID":"1329","explanation":"","answers":[{"ID":"6757","answer":"False","correct":"1"},{"ID":"6756","answer":"True","correct":"0"}]},{"question":"2. The IMF and its Troika partners claim that the recovery in Greece is dependent on internal devaluation and the austerity programs are designed to deflate nominal wages and prices which is claimed will make the economy more competitive as long as real unit labour costs fall faster than their trading partners. However, if wages and prices fall at the same rate, which of the following propositions must also follow if the IMF logic is to be consistent (ignoring whether the logic is correct or not):","ID":"1330","explanation":"","answers":[{"ID":"6750","answer":"Labour productivity has to rise and employment remain constant or grow.","correct":"0"},{"ID":"6751","answer":"Labour productivity has to rise and employment must grow.","correct":"0"},{"ID":"6752","answer":"Labour productivity has to rise and what happens to employment is irrelevant.","correct":"1"},{"ID":"6753","answer":"None of the above","correct":"0"}]},{"question":"3. The conservative Australian government recently scrapped the mining tax that had been introduced by the previous government. The conservatives argued that the higher taxes had distorted the allocation of resources by changing the rates of return on different uses of capital (and labour). The previous tax had taken the form of a Resource Super Profits Tax on mining companies. Leaving aside the arguments that the government does not need revenue to spend, a typical mainstream economist would agree with the conservative government"s decision and conclude that the tax was bad because it reduced mining investment.","ID":"1331","explanation":"","answers":[{"ID":"6755","answer":"False","correct":"1"},{"ID":"6754","answer":"True","correct":"0"}]}]}, {"ID":"309","name":"Quiz 2015 - 08","added_on":"2015-02-19 01:59:40","questions":[{"question":"1. By defining full employment at levels above the minimum unemployment rate that could be sustained in any nation, organisations such as the IMF and the OECD, generate estimates of structural fiscal deficits that are biased downwards.","ID":"1332","explanation":"","answers":[{"ID":"6765","answer":"False","correct":"1"},{"ID":"6764","answer":"True","correct":"0"}]},{"question":"2. When a sovereign government issues debt it logically:","ID":"1333","explanation":"","answers":[{"ID":"6766","answer":"increases the assets that are held by the non-government sector $-for-$.","correct":"0"},{"ID":"6767","answer":"has no impact on the overall holdings of assets held by the non-government sector $-for-$.","correct":"1"},{"ID":"6768","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"}]},{"question":"3. Under a fiat monetary system, the absence of currency convertibility means:","ID":"1334","explanation":"","answers":[{"ID":"6769","answer":"there is no reason for people to hold currency as a hedge against gold price falls.","correct":"0"},{"ID":"6770","answer":"that the government can motivate people to exchange goods and services in return for public spending by charging a fixed fee in the local currency for leaving one"s home each day.","correct":"1"},{"ID":"6771","answer":"that the currency is only convertible into government bonds rather than gold.","correct":"0"}]}]}, {"ID":"310","name":"Quiz 2015 - 09","added_on":"2015-02-26 06:22:53","questions":[{"question":"1. Say a currency-issuing government plans to achieve a fiscal surplus of 0.1 per cent of GDP in the next financial year. The aim underpins a massive fiscal shift from a fiscal deficit of around 3 per cent of GDP in that period. If the actual fiscal outcome remains in deficit at the end of the following financial year, the said government will be rightly considered not to have gone hard enough on its fiscal austerity plans.","ID":"1335","explanation":"","answers":[{"ID":"6779","answer":"False","correct":"1"},{"ID":"6778","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) brings an understanding of the way central banks purchase and sell government bonds to manage liquidity in the overnight cash markets and thus sustain their target rate of interest. MMT also leads to the conclusion that a central bank could still increase interest rates even if a currency-issuing government instructed it to directly purchase treasury debt to facilitate the national governments fiscal deficit.","ID":"1336","explanation":"","answers":[{"ID":"6781","answer":"False","correct":"0"},{"ID":"6780","answer":"True","correct":"1"}]},{"question":"3. Quantitative easing aims to stimulate aggregate demand by reducing long-term investment rates whereas deficit spending aims to stimulate aggregate demand via tax cuts or direct public spending. Both policies ultimately work by increasing the net financial assets held by the non-government sector even if QE is less (even largely) ineffective.","ID":"1337","explanation":"","answers":[{"ID":"6783","answer":"False","correct":"1"},{"ID":"6782","answer":"True","correct":"0"}]}]}, {"ID":"311","name":"Quiz 2015 - 10","added_on":"2015-03-05 02:46:56","questions":[{"question":"1. If the government increases its fiscal deficit as a percentage of GDP it will always squeeze the real resources available for private productive uses.","ID":"1338","explanation":"","answers":[{"ID":"6791","answer":"False","correct":"0"},{"ID":"6790","answer":"True","correct":"1"}]},{"question":"2. For a nation running a current account deficit, national income adjustments will ensure government fiscal balance is in deficit no matter what the government"s intentions are if the private domestic sector is spending less than its income.","ID":"1339","explanation":"","answers":[{"ID":"6793","answer":"False","correct":"0"},{"ID":"6792","answer":"True","correct":"1"}]},{"question":"3. A currency-issuing government can avoid issuing debt to the private sector when running a fiscal deficit even if the central bank is targeting a positive short-term policy rate.","ID":"1340","explanation":"","answers":[{"ID":"6795","answer":"False","correct":"0"},{"ID":"6794","answer":"True","correct":"1"}]}]}, {"ID":"312","name":"Quiz 2015 - 11","added_on":"2015-03-12 20:37:50","questions":[{"question":"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 of GDP. If the fiscal balance remains unchanged and the external surplus rises to 4 per cent of GDP then:","ID":"1341","explanation":"","answers":[{"ID":"6796","answer":"National income rises and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"6797","answer":"National income remains unchanged and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"6798","answer":"National income falls and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"6799","answer":"National income rises and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"1"},{"ID":"6800","answer":"National income remains unchanged and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"},{"ID":"6801","answer":"National income falls and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"}]},{"question":"2. A rising fiscal deficit necessarily indicates that fiscal policy is expansionary.","ID":"1342","explanation":"","answers":[{"ID":"6802","answer":"True","correct":"1"},{"ID":"6803","answer":"False","correct":"0"}]},{"question":"3. If private households and firms decide to lift their saving ratio the national government has to increase its net spending (deficit) to fill the spending gap or else economic activity will slow down.","ID":"1343","explanation":"","answers":[{"ID":"6804","answer":"True","correct":"0"},{"ID":"6805","answer":"False","correct":"1"}]}]}, {"ID":"313","name":"Quiz 2015 - 12","added_on":"2015-03-19 02:33:59","questions":[{"question":"1. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"1344","explanation":"","answers":[{"ID":"6823","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"},{"ID":"6822","answer":"A nation can run a current account deficit with a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"6821","answer":"A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"6820","answer":"A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","correct":"0"}]},{"question":"2. One possible problem with running continuous budget deficits is that the spending builds up over time and with inflation eventually becoming the risk that has to be managed.","ID":"1345","explanation":"","answers":[{"ID":"6819","answer":"False","correct":"1"},{"ID":"6818","answer":"True","correct":"0"}]},{"question":"3. If employment growth matches the pace of growth in the civilian population (people above 15 years of age) then the economy will experience a constant unemployment rate as long as participation rates do not change.","ID":"1346","explanation":"","answers":[{"ID":"6825","answer":"False","correct":"0"},{"ID":"6824","answer":"True ","correct":"1"}]}]}, {"ID":"314","name":"Quiz 2015 - 13","added_on":"2015-03-26 20:26:22","questions":[{"question":"1. The price at which the central bank provides reserves to the commercial banks is restricted by its target monetary policy rate. ","ID":"1347","explanation":"","answers":[{"ID":"6833","answer":"False","correct":"0"},{"ID":"6832","answer":"True","correct":"1"}]},{"question":"2. If all national governments simultaneously run public surpluses then it is not possible for all their private domestic sectors to save overall. ","ID":"1348","explanation":"","answers":[{"ID":"6835","answer":"False","correct":"0"},{"ID":"6834","answer":"True","correct":"1"}]},{"question":"3. From the US National Accounts, you find that in 2006, the share of Personal consumption expenditure in real GDP was 69.9 per cent and by 2008 it had fallen to 69.8 per cent. Similarly, the share of Gross private domestic investment on real GDP was 17.2 per cent in 2006 and by 2008 had fallen to 14.9 per cent (and further to 11.8 per cent in 2009). The net export deficit over the same period (2006 to 2008) fell from -5.7 per cent of real GDP to -4.9 per cent in 2008. Finally, the share of Government consumption expenditures and gross investment in real GDP rose from 18.8 per cent in 2006 to 18.9 per cent in 2008 (and 19.7 per cent in 2009). These relative changes tell you that real GDP was lower in 2008 compared to 2006 because the increase in Government spending and the falling negative contribution of net exports were not sufficient to offset the declining contribution from consumption and investment.","ID":"1349","explanation":"","answers":[{"ID":"6837","answer":"False","correct":"1"},{"ID":"6836","answer":"True","correct":"0"}]}]}, {"ID":"315","name":"Quiz 2015 - 14","added_on":"2015-04-02 20:27:01","questions":[{"question":"1. Modern Monetary Theory tells us that a sovereign national government can run deficits without issuing debt. But the debt issuance allows the government to drain demand (private spending capacity) so that the public spending has more non-inflationary room to work within.","ID":"1350","explanation":"","answers":[{"ID":"6847","answer":"False","correct":"1"},{"ID":"6846","answer":"True","correct":"0"}]},{"question":"2. The government and the private domestic sectors cannot simultaneously reduce their debt levels (under current public sector debt-issuance arrangements)","ID":"1351","explanation":"","answers":[{"ID":"6849","answer":"False","correct":"1"},{"ID":"6848","answer":"True ","correct":"0"}]},{"question":"3. A sovereign currency-issuing national government cannot generate full employment without taxation.","ID":"1352","explanation":"","answers":[{"ID":"6845","answer":"False","correct":"0"},{"ID":"6844","answer":"True","correct":"1"}]}]}, {"ID":"316","name":"Quiz 2015 - 15","added_on":"2015-04-09 07:41:41","questions":[{"question":"1. What conservatives fail to understand is the public debt to GDP ratio always falls once economic growth resumes.","ID":"1353","explanation":"","answers":[{"ID":"6857","answer":"False","correct":"1"},{"ID":"6856","answer":"True","correct":"0"}]},{"question":"2. A nation can run an external deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","ID":"1354","explanation":"","answers":[{"ID":"6859","answer":"False","correct":"0"},{"ID":"6858","answer":"True","correct":"1"}]},{"question":"3. The monetary base of an economy adjusts to changes in the money supply not the other way around.","ID":"1355","explanation":"","answers":[{"ID":"6861","answer":"False","correct":"0"},{"ID":"6860","answer":"True","correct":"1"}]}]}, {"ID":"317","name":"Quiz 2015 - 16","added_on":"2015-04-16 06:53:12","questions":[{"question":"1. This week, a ratings agency downgraded Greek government debt because the nation faces insolvency risk. If Greece left the Eurozone and re-established its own currency, converted all euro liabilities to their own currency, they would eliminate that risk on all future liabilities.","ID":"1356","explanation":"","answers":[{"ID":"6869","answer":"False","correct":"1"},{"ID":"6868","answer":"True","correct":"0"}]},{"question":"2. European Commission estimates of structural budget deficits in the Eurozone under the Excessive Deficit Mechanism lead to the conclusion that a government"s discretionary fiscal position is less expansionary than it actually is.","ID":"1357","explanation":"","answers":[{"ID":"6871","answer":"False","correct":"1"},{"ID":"6870","answer":"True","correct":"0"}]},{"question":"3. Under current institutional arrangements, the change in the ratio of public debt to GDP will exactly equal the primary fiscal deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP minus the changes in the monetary base arising from official foreign exchange transactions.","ID":"1358","explanation":"","answers":[{"ID":"6873","answer":"False","correct":"1"},{"ID":"6872","answer":"True","correct":"0"}]}]}, {"ID":"318","name":"Quiz 2015 - 17","added_on":"2015-04-22 03:55:00","questions":[{"question":"1. In the wake of a rising household saving ratio, a nation with an external deficit will move towards recession unless government net spending increases.","ID":"1359","explanation":"","answers":[{"ID":"6881","answer":"False","correct":"1"},{"ID":"6880","answer":"True","correct":"0"}]},{"question":"2. The IMF recently downgraded their real GDP growth estimates for several advanced economies. One such economy is now projected to grow in real terms by around 2.1 per cent over the next 12 months. Real GDP per employed person is estimated to grow by 1.1 per cent over the same period and there is also the expectation that average weekly hours worked will remain more or less constant in 2013. Which of the following labour force growth rates would provide the basis for the forecast that the unemployment rate will be lower in 12 months time?","ID":"1360","explanation":"","answers":[{"ID":"6883","answer":"2.1","correct":"0"},{"ID":"6882","answer":"3.2","correct":"0"},{"ID":"6884","answer":"0.9","correct":"1"},{"ID":"6885","answer":"Cannot tell because we don"t know what the participation rate is likely to be.","correct":"0"}]},{"question":"3. Economists use two multipliers to estimate the impact on GDP of an expansion in government spending associated with rising tax rates. The spending multiplier indicates the extent to which GDP rises as a result of the extra aggregate demand arising from the increased government spending. The tax multiplier indicates the impact of rising tax rates on GDP as labour supply is reduced because of the disincentives associated with taxation. The net effect on GDP is the sum of these two impacts.","ID":"1361","explanation":"","answers":[{"ID":"6887","answer":"False","correct":"1"},{"ID":"6886","answer":"True","correct":"0"}]}]}, {"ID":"319","name":"Quiz 2015 - 18","added_on":"2015-04-30 22:12:01","questions":[{"question":"1. If there is an external deficit of 2 per cent of GDP and the government achieves a fiscal balance then the private domestic sector will have:","ID":"1362","explanation":"","answers":[{"ID":"6894","answer":"an excess of spending relative to its income equal to 2 per cent of GDP.","correct":"1"},{"ID":"6895","answer":"a deficit in spending relative to its income equal to 2 per cent of GDP.","correct":"0"},{"ID":"6896","answer":"Cannot really tell definitively without further information.","correct":"0"}]},{"question":"2. When a national government borrows from the private sector it drains funds out of the system and reduces the risk that public spending will overheat the economy.","ID":"1363","explanation":"","answers":[{"ID":"6898","answer":"False","correct":"1"},{"ID":"6897","answer":"True","correct":"0"}]},{"question":"3. A national government would be unable to rely on the central bank purchasing treasury debt to match its fiscal deficit (that is, \\\"monetise the deficit\\\") if the central bank is targeting a positive short-term policy rate.","ID":"1364","explanation":"","answers":[{"ID":"6900","answer":"False","correct":"1"},{"ID":"6899","answer":"True","correct":"0"}]}]}, {"ID":"320","name":"Quiz 2015 - 19","added_on":"2015-05-06 18:36:35","questions":[{"question":"1. When the government matches a deficit by issuing debt to the private sector this is equivalent to a leakage from the expenditure system (akin to taxation, saving or imports) which reduces the expansionary impact of the government deficit spending.","ID":"1365","explanation":"","answers":[{"ID":"6908","answer":"False","correct":"1"},{"ID":"6907","answer":"True","correct":"0"}]},{"question":"2. Which fiscal deficit outcome is the least expansionary?","ID":"1366","explanation":"","answers":[{"ID":"6909","answer":"1 per cent of GDP","correct":"1"},{"ID":"6910","answer":"2 per cent of GDP","correct":"0"},{"ID":"6911","answer":"3 per cent of GDP","correct":"0"},{"ID":"6912","answer":"Cannot say, it depends on the decomposition of the structural and cyclical components.","correct":"0"}]},{"question":"3. If the government reduces its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"1367","explanation":"","answers":[{"ID":"6914","answer":"False","correct":"1"},{"ID":"6913","answer":"True","correct":"0"}]}]}, {"ID":"321","name":"Quiz 2015 - 20","added_on":"2015-05-13 22:12:54","questions":[{"question":"1. National accounting rules dictate that a national government surplus equals a non-government deficit (and vice-versa). If a national government successfully achieves a budget surplus through an austerity program then the private domestic sector must be spending more than it is earning.","ID":"1368","explanation":"","answers":[{"ID":"6922","answer":"False","correct":"1"},{"ID":"6921","answer":"True","correct":"0"}]},{"question":"2. The share of national income going to profits has expanded over the last 30 years in many nations because employers have successfully suppressed real wages growth.","ID":"1369","explanation":"","answers":[{"ID":"6928","answer":"False","correct":"1"},{"ID":"6927","answer":"True","correct":"0"}]},{"question":"3. The Australian dollar has appreciated in recent days but the damaging effects on our international competitiveness can be offset if local workers accept a cut in nominal wages and the rate of inflation is contained.","ID":"1370","explanation":"","answers":[{"ID":"6934","answer":"False","correct":"1"},{"ID":"6933","answer":"True","correct":"0"}]}]}, {"ID":"322","name":"Quiz 2015 - 21","added_on":"2015-05-21 06:59:50","questions":[{"question":"1. In general, the OECD and IMF estimates of the impact of the automatic stabilisers attached to the fiscal balance are biased downwards.","ID":"1371","explanation":"","answers":[{"ID":"6948","answer":"False","correct":"0"},{"ID":"6947","answer":"True","correct":"1"}]},{"question":"2. If there is an external deficit, efforts by the private domestic sector to increase its overall saving as a percentage of GDP, will ensure the government fiscal balance is in deficit, irrespective of what the government desires.","ID":"1372","explanation":"","answers":[{"ID":"6950","answer":"False","correct":"0"},{"ID":"6949","answer":"True","correct":"1"}]},{"question":"3. When a government runs a continuous fiscal deficit, the public spending builds up over time and may eventually exposes the economy to inflation risk.","ID":"1373","explanation":"","answers":[{"ID":"6952","answer":"False","correct":"1"},{"ID":"6951","answer":"True","correct":"0"}]}]}, {"ID":"323","name":"Quiz 2015 - 22","added_on":"2015-05-28 20:23:38","questions":[{"question":"1. The operation of the automatic stabilisers built into the fiscal parameters (tax rates, income support etc) always supports growth","ID":"1374","explanation":"","answers":[{"ID":"6960","answer":"False","correct":"1"},{"ID":"6959","answer":"True","correct":"0"}]},{"question":"2. Continuous fiscal deficits are more likely to present an inflation risk than one-off deficits designed to meet a short-term private spending decline.","ID":"1375","explanation":"","answers":[{"ID":"6964","answer":"False","correct":"1"},{"ID":"6963","answer":"True","correct":"0"}]},{"question":"3. To maintain financial stability, the monetary base has to be driven by changes in the money supply just as the money multiplier in mainstream macroeconomics textbooks explains.","ID":"1376","explanation":"","answers":[{"ID":"6966","answer":"False","correct":"1"},{"ID":"6965","answer":"True ","correct":"0"}]}]}, {"ID":"324","name":"Quiz 2015 - 24","added_on":"2015-06-02 20:20:55","questions":[{"question":"1. When an economy is running an external deficit, national income movements will ensure that only one of the two remaining sectors can spend less than they receive, irrespective of the GDP growth rate.","ID":"1377","explanation":"","answers":[{"ID":"6974","answer":"False","correct":"0"},{"ID":"6973","answer":"True","correct":"1"}]},{"question":"2. Unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government, which issues its own currency, can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"1378","explanation":"","answers":[{"ID":"6976","answer":"False","correct":"1"},{"ID":"6975","answer":"True","correct":"0"}]},{"question":"3. Standing facilities that central banks maintain with commercial banks means that the money supply always adjusts to movements in the monetary base. ","ID":"1379","explanation":"","answers":[{"ID":"6978","answer":"False","correct":"1"},{"ID":"6977","answer":"True ","correct":"0"}]}]}, {"ID":"325","name":"Quiz 2015 - 25","added_on":"2015-06-11 06:55:59","questions":[{"question":"1. We are told that a country is running a very small external deficit and that the private domestic sector is spending less overall than it is earning but relative to GDP this balance is smaller than the external deficit. Without knowing the relative magnitudes of these balances, we cannot conclusively determine whether the government is in deficit or surplus.","ID":"1380","explanation":"","answers":[{"ID":"6986","answer":"False","correct":"1"},{"ID":"6985","answer":"True","correct":"0"}]},{"question":"2. Government bonds constitute a form of wealth held by the non-government sector and thus the overall non-government sector wealth rises when the government issues bonds to match its deficit spending.","ID":"1381","explanation":"","answers":[{"ID":"6988","answer":"False","correct":"1"},{"ID":"6987","answer":"True","correct":"0"}]},{"question":"3. When a government records a fiscal surplus, which means it is withdrawing more purchasing power from the economy than it is adding, we know that it is seeking to attenuate the growth in aggregate demand to avoid the risk of inflation.","ID":"1382","explanation":"","answers":[{"ID":"6990","answer":"False","correct":"1"},{"ID":"6989","answer":"True","correct":"0"}]}]}, {"ID":"326","name":"Quiz 2015 - 26","added_on":"2015-06-18 05:13:55","questions":[{"question":"1. Assume inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting. It is then true that if government spending increases by $X dollars and private investment and exports are unchanged then nominal income will continue growing until the sum of taxation revenue, import spending and household saving rises by $X dollars.","ID":"1383","explanation":"","answers":[{"ID":"6998","answer":"False","correct":"0"},{"ID":"6997","answer":"True","correct":"1"}]},{"question":"2. The expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance because then excess reserves are drained and the purchasing power is taken out of the monetary system.","ID":"1384","explanation":"","answers":[{"ID":"7000","answer":"False","correct":"1"},{"ID":"6999","answer":"True","correct":"0"}]},{"question":"3. The private domestic sector can save overall even if the government fiscal balance is in surplus as long as the external sector is adding to total demand in the economy.","ID":"1385","explanation":"","answers":[{"ID":"7002","answer":"False","correct":"1"},{"ID":"7001","answer":"True","correct":"0"}]}]}, {"ID":"327","name":"Quiz 2015 - 27","added_on":"2015-06-25 07:08:39","questions":[{"question":"1. If the government achieves in reducing its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"1386","explanation":"","answers":[{"ID":"7010","answer":"False","correct":"1"},{"ID":"7009","answer":"True","correct":"0"}]},{"question":"2. When a country runs an external surplus, the national government can safely run a fiscal surplus without impeding economic growth.","ID":"1387","explanation":"","answers":[{"ID":"7018","answer":"False","correct":"1"},{"ID":"7017","answer":"True","correct":"0"}]},{"question":"3. Which fiscal deficit outcome is the most expansionary?","ID":"1388","explanation":"","answers":[{"ID":"7013","answer":"1 per cent of GDP","correct":"0"},{"ID":"7014","answer":"2 per cent of GDP","correct":"0"},{"ID":"7015","answer":"3 per cent of GDP","correct":"1"},{"ID":"7016","answer":"It depends on the decomposition of the structural and cyclical (automatic stabiliser) components","correct":"0"}]}]}, {"ID":"328","name":"Quiz 2015 - 28","added_on":"2015-07-01 19:00:36","questions":[{"question":"1. One advantage of low inflation is that the central bank can better use balance sheet management techniques to control yields on public debt at certain targetted maturities.","ID":"1389","explanation":"","answers":[{"ID":"7026","answer":"False","correct":"0"},{"ID":"7025","answer":"True","correct":"1"}]},{"question":"2. Adopting a fiscal rule that requires the government maintain a fiscal balance of zero at all times means that the fiscal outcome is insulated from the impact of the automatic stabilisers.","ID":"1390","explanation":"","answers":[{"ID":"7028","answer":"False","correct":"1"},{"ID":"7027","answer":"True","correct":"0"}]},{"question":"3. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"1391","explanation":"","answers":[{"ID":"7029","answer":"A nation can run an external deficit and equal government surplus while the private domestic sector is saving overall.","correct":"0"},{"ID":"7030","answer":"A nation can run an external deficit and equal government surplus while the private domestic sector is dis-saving overall.","correct":"1"},{"ID":"7031","answer":"A nation can run an external deficit and a larger government surplus while the private domestic sector is saving overall.","correct":"0"},{"ID":"7032","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]}]}, {"ID":"329","name":"Quiz 2015 - 29","added_on":"2015-07-08 20:32:15","questions":[{"question":"1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, we cannot tell what the government fiscal balance will be (deficit or surplus) until we know the relative magnitudes of the other two balances.","ID":"1392","explanation":"","answers":[{"ID":"7050","answer":"False","correct":"1"},{"ID":"7049","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) explains how central banks sell bonds to drain excess bank reserves in order to maintain their given interest rate setting. We know that the same outcome can be achieved by paying interest to the commercial banks on the same reserves. Ignoring any reserve requirements, this means that there is no need for the central bank to sell debt when the government net spends.","ID":"1393","explanation":"","answers":[{"ID":"7042","answer":"False","correct":"1"},{"ID":"7041","answer":"True","correct":"0"}]},{"question":"3. The Troika wants Greece to stimulate economic growth by restoring export competitiveness through domestic deflation (reducing domestic wages and prices relative to other nations). However, Greece"s export competitiveness may still fall no matter how much it deflates.","ID":"1394","explanation":"","answers":[{"ID":"7046","answer":"False","correct":"0"},{"ID":"7045","answer":"True","correct":"1"}]}]}, {"ID":"330","name":"Quiz 2015 - 30","added_on":"2015-07-16 04:03:46","questions":[{"question":"1. If a national government constructs a road in Year 1 but then in Year 2 tears it up and relays it with the recycled road materials, the national income stimulus from the policy is only enjoyed in the first year.","ID":"1395","explanation":"","answers":[{"ID":"7062","answer":"False","correct":"1"},{"ID":"7061","answer":"True","correct":"0"}]},{"question":"2. A "balanced budget" rule adopted by a national government eliminates the swings in the fiscal balance that arise from the automatic stabilisers.","ID":"1396","explanation":"","answers":[{"ID":"7066","answer":"False","correct":"1"},{"ID":"7065","answer":"True","correct":"0"}]},{"question":"3. The private domestic sector will save overall even if the government"s fiscal balance is in surplus as long as net exports are positive.","ID":"1397","explanation":"","answers":[{"ID":"7058","answer":"False","correct":"1"},{"ID":"7057","answer":"True","correct":"0"}]}]}, {"ID":"331","name":"Quiz 2015 - 31","added_on":"2015-07-24 02:50:51","questions":[{"question":"1. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory (MMT) tells us that the government must increase net spending or else national output and income will fall.","ID":"1398","explanation":"","answers":[{"ID":"7074","answer":"False","correct":"1"},{"ID":"7073","answer":"True","correct":"0"}]},{"question":"2. An economy is projected to grow in real terms by around 1.5 per cent over the next year. It is also predicted that real GDP per employed person will grow by 1.1 per cent over the same period and that average weekly hours worked will remain more or less constant. Which of the following labour force growth rates would provide the basis for an expectation that the unemployment rate will be lower at the end of the year than at the beginning?","ID":"1399","explanation":"","answers":[{"ID":"7075","answer":"0.5 per cent","correct":"0"},{"ID":"7076","answer":"2.6 per cent","correct":"0"},{"ID":"7077","answer":"0.3 per cent","correct":"1"},{"ID":"7078","answer":" Cannot tell because we don"t know what the participation rate is likely to be","correct":"0"}]},{"question":"3. EMU member nations face solvency risk because they do not issue their own currency. This source of risk would be eliminated if these nations exited the Eurozone and issued their own floating currency.","ID":"1400","explanation":"","answers":[{"ID":"7080","answer":"False","correct":"1"},{"ID":"7079","answer":"True","correct":"0"}]}]}, {"ID":"332","name":"Quiz 2015 - 32","added_on":"2015-07-30 22:19:49","questions":[{"question":"1. Assume that the current account deficit of a nation is on average over the business cycle equal to 2 per cent of GDP and that the government manages to run a balanced fiscal position when averaged over the same cycle. We can conclude that on average the private domestic sector overall is becoming increasingly indebted.","ID":"1401","explanation":"","answers":[{"ID":"7094","answer":"False","correct":"0"},{"ID":"7093","answer":"True","correct":"1"}]},{"question":"2. Trade unions can ensure that workers gain a greater share of national income if they attain aggregate wages growth greater than the inflation rate.","ID":"1402","explanation":"","answers":[{"ID":"7090","answer":"False","correct":"1"},{"ID":"7089","answer":"True","correct":"0"}]},{"question":"3. Sovereign government spending becomes more expensive when government bond yields for new issues rise.","ID":"1403","explanation":"","answers":[{"ID":"7096","answer":"False","correct":"1"},{"ID":"7095","answer":"True","correct":"0"}]}]}, {"ID":"333","name":"Quiz 2015 - 33","added_on":"2015-08-06 05:42:29","questions":[{"question":"1. If a nation"s external sector is in balance then the private domestic sector cannot save overall if the government runs a balanced fiscal outcome.","ID":"1404","explanation":"","answers":[{"ID":"7110","answer":"False","correct":"0"},{"ID":"7109","answer":"True","correct":"1"}]},{"question":"2. A tax increase, which aims to increase tax revenue at the current level of national income by $x, will have a smaller initial negative impact on aggregate demand than a government spending cut of $x?","ID":"1405","explanation":"","answers":[{"ID":"7106","answer":"False","correct":"0"},{"ID":"7105","answer":"True","correct":"1"}]},{"question":"3 If the external sector is accumulating financial claims on the local economy and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can run surpluses without damaging employment growth.","ID":"1406","explanation":"","answers":[{"ID":"7108","answer":"False","correct":"1"},{"ID":"7107","answer":"True","correct":"0"}]}]}, {"ID":"334","name":"Quiz 2015 - 34","added_on":"2015-08-13 04:35:40","questions":[{"question":"1. Assume a nation is running an external surplus equivalent to 2 per cent of GDP and the government manages to run a fiscal surplus equivalent to 1 per cent of GDP (taxes greater than spending). The national income changes associated with these balances would ensure that the private domestic sector was running an overall deficit of 1 per cent of GDP.","ID":"1407","explanation":"","answers":[{"ID":"7134","answer":"False","correct":"1"},{"ID":"7133","answer":"True","correct":"0"}]},{"question":"2. Starting from the external situation in Question 1, with the surplus being the equivalent of 2 per cent of GDP but this time the fiscal surplus is currently 2 per cent of GDP. If the fiscal balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then you can conclude that national income also rises and the private surplus moves from minus 2 per cent of GDP to plus 2 per cent of GDP.","ID":"1408","explanation":"","answers":[{"ID":"7138","answer":"False","correct":"1"},{"ID":"7137","answer":"True","correct":"0"}]},{"question":"3. If all bank loans had to be backed by reserves held at the bank (a 100 per cent reserve requirement) then the capacity of the banks to lend would be more constrained which would help maintain financial stability.","ID":"1409","explanation":"","answers":[{"ID":"7132","answer":"False","correct":"1"},{"ID":"7131","answer":"True","correct":"0"}]}]}, {"ID":"335","name":"Quiz 2015 - 35","added_on":"2015-08-21 03:41:32","questions":[{"question":"1. As a matter of accounting, the financial assets held by the non-government sector rise $-for-$ when a sovereign government issues debt to the private bond holders.","ID":"1410","explanation":"","answers":[{"ID":"7146","answer":"False","correct":"1"},{"ID":"7145","answer":"True","correct":"0"}]},{"question":"2. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the domestic private domestic sector cannot reduce its overall debt levels by increasing its net saving without incurring income losses.","ID":"1411","explanation":"","answers":[{"ID":"7148","answer":"False","correct":"0"},{"ID":"7147","answer":"True","correct":"1"}]},{"question":"3. The imposition of fiscal rules which aim to limit the discretionary capacity of governments to net spend bias fiscal policy towards counter-cyclical responses when private spending is weak.","ID":"1412","explanation":"","answers":[{"ID":"7150","answer":"False","correct":"1"},{"ID":"7149","answer":"True","correct":"0"}]}]}, {"ID":"336","name":"Quiz 2015 - 36","added_on":"2015-08-21 03:51:34","questions":[{"question":"1. Financial market commentators watch movements in government bond yields as a guide to the state of confidence in the capacity of the respective governments to honour their liabilities. In this context, the commentators are correct when they conclude that rising yields on a particular 10-year bond yields are a sign that bond markets believe the assets to be riskier and are demanding increased risk premiums for them. ","ID":"1413","explanation":"","answers":[{"ID":"7158","answer":"False","correct":"1"},{"ID":"7157","answer":"True","correct":"0"}]},{"question":"2. Continually expanding the money supply will eventually lead to inflation.","ID":"1414","explanation":"","answers":[{"ID":"7160","answer":"False","correct":"1"},{"ID":"7159","answer":"True","correct":"0"}]},{"question":"3. While a currency-issuing government does not have to issue debt to the non-government sector to match its deficit spending, it does reduce the inflation risk embodied in the spending because it drains the purchasing power of the private sector which gives itself more nominal spending space.","ID":"1415","explanation":"","answers":[{"ID":"7162","answer":"False","correct":"1"},{"ID":"7161","answer":"True","correct":"0"}]}]}, {"ID":"337","name":"Quiz 2015 - 37","added_on":"2015-08-21 04:03:29","questions":[{"question":"1. National accounting rules dictate that a national government surplus equals a non-government deficit (and vice-versa). If a national government successfully achieves a fiscal surplus through an austerity program then the private domestic sector must be spending more than it is earning.","ID":"1416","explanation":"","answers":[{"ID":"7178","answer":"False","correct":"1"},{"ID":"7177","answer":"True","correct":"0"}]},{"question":"2. If the stock of aggregate spending in the economy exceeds the capacity of the productive sector to respond by producing extra real goods and services then inflation is inevitable.","ID":"1417","explanation":"","answers":[{"ID":"7172","answer":"False","correct":"1"},{"ID":"7171","answer":"True","correct":"0"}]},{"question":"3. Assume that the government increases spending by $100 billion at the start of each year and maintains this policy for the next three years from now. Economists estimate the spending multiplier to be 2 and the impact is exhausted within each year (all induced consumption is completed within 12 months). The tax multiplier is estimated to be equal to 1 and the current average tax rate is equal to 25 per cent (so tax revenue rises by 25 cents for every extra dollar of GDP produced ). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"1418","explanation":"","answers":[{"ID":"7173","answer":"$600 billion","correct":"1"},{"ID":"7174","answer":"$200 billion","correct":"0"},{"ID":"7175","answer":"$150 billion","correct":"0"},{"ID":"7176","answer":"$450 billion","correct":"0"}]}]}, {"ID":"338","name":"Quiz 2015 - 38","added_on":"2015-09-10 04:42:03","questions":[{"question":"1. The private domestic sector will always be spending less than it earns in situations where the government fiscal balance is zero and the nation runs continuous external deficits.","ID":"1419","explanation":"","answers":[{"ID":"7192","answer":"False","correct":"1"},{"ID":"7191","answer":"True","correct":"0"}]},{"question":"2. If a national government receives advice that the estimated output gap for their nation was less than previously thought, then other things equal, its discretionary fiscal austerity would have to be intensified to achieve a zero structural fiscal balance if it was currently in deficit.","ID":"1420","explanation":"","answers":[{"ID":"7200","answer":"False","correct":"0"},{"ID":"7199","answer":"True","correct":"1"}]},{"question":"3. Opponents of continuous fiscal deficits often agree that short-period of deficit spending is not likely to be inflationary when the private demand is weak. Their main concern is that the accumulated stock of spending associated with continuous fiscal deficits eventually increases the risk of inflation. Their concern has validity.","ID":"1421","explanation":"","answers":[{"ID":"7194","answer":"False","correct":"1"},{"ID":"7193","answer":"True","correct":"0"}]}]}, {"ID":"339","name":"Quiz 2015 - 39","added_on":"2015-09-17 04:00:32","questions":[{"question":"1. An external surplus is a necessary but not sufficient condition for a nation that wishes to grow during a period when the government is running a fiscal surplus and the private domestic sector is net saving.","ID":"1422","explanation":"","answers":[{"ID":"7216","answer":"False","correct":"0"},{"ID":"7215","answer":"True","correct":"1"}]},{"question":"2. If central banks stopped paying a return to the private banks on the reserves they hold with the central bank then the private banks would have a greater incentive to advance credit to the private sector.","ID":"1423","explanation":"","answers":[{"ID":"7210","answer":"False","correct":"1"},{"ID":"7209","answer":"True","correct":"0"}]},{"question":"3. A nation can only start to reduce its public debt to GDP ratio when it succeeds in running primary fiscal surpluses (that is, its spending net of interest payments is less than taxation revenue).","ID":"1424","explanation":"","answers":[{"ID":"7214","answer":"False","correct":"1"},{"ID":"7213","answer":"True","correct":"0"}]}]}, {"ID":"340","name":"Quiz 2015 - 40","added_on":"2015-09-24 04:43:13","questions":[{"question":"1. If the government abandons the practice of issuing bonds to the non-government sector to match its fiscal deficit, the latter will be less wealthy but have more cash.","ID":"1425","explanation":"","answers":[{"ID":"7226","answer":"False","correct":"1"},{"ID":"7225","answer":"True","correct":"0"}]},{"question":"2. When a country runs a small current account deficit and the private domestic sector is saving overall, the government fiscal balance will always be in deficit.","ID":"1426","explanation":"","answers":[{"ID":"7224","answer":"False","correct":"0"},{"ID":"7223","answer":"True","correct":"1"}]},{"question":"3. The British Labour Party under its new leadership is still wedded to eliminating the fiscal deficit. However, it has stated it prefers tax increases rather than spending cuts whereas so-called \\\"conservatives\\\" recommend spending cuts and privatisation. In terms of the initial impact on national income, which policy option will be more damaging - a tax increase which aims to increase tax revenue at the current level of national income by $x or a spending cut of $x?","ID":"1427","explanation":"","answers":[{"ID":"7227","answer":"Tax increase","correct":"0"},{"ID":"7228","answer":"Spending cut","correct":"1"},{"ID":"7229","answer":"Both will be equivalent","correct":"0"},{"ID":"7230","answer":"There is not enough information to answer this question","correct":"0"}]}]}, {"ID":"341","name":"Quiz 2015 - 41","added_on":"2015-10-01 07:21:41","questions":[{"question":"1. If the share in national income that workers receive (the wage share) falls then their real standard of living is reduced.","ID":"1428","explanation":"","answers":[{"ID":"7244","answer":"False","correct":"1"},{"ID":"7243","answer":"True","correct":"0"}]},{"question":"2. Government spending can crowd out private spending.","ID":"1429","explanation":"","answers":[{"ID":"7248","answer":"False","correct":"0"},{"ID":"7247","answer":"True","correct":"1"}]},{"question":"3. Suppose that the government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If the private domestic sector engaged in debt reduction which resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.","ID":"1430","explanation":"","answers":[{"ID":"7250","answer":"False","correct":"0"},{"ID":"7249","answer":"True","correct":"1"}]}]}, {"ID":"342","name":"Quiz 2015 - 42","added_on":"2015-10-01 07:23:02","questions":[{"question":"1. The automatic stabilisers operate in a counter-cyclical fashion and ensure that the government fiscal balance, which rises during a recession, returns to its appropriate level once growth returns to its long-term trend.","ID":"1431","explanation":"","answers":[{"ID":"7252","answer":"False","correct":"1"},{"ID":"7251","answer":"True","correct":"0"}]},{"question":"2. Which scenario represents a more expansionary outcome: (a) A fiscal deficit equivalent to 5 per cent of GDP (including the impact of automatic stabilisers equivalent to 3 per cent of GDP). (b) A fiscal deficit equivalent to 3 per cent of GDP. (c) You cannot tell because you do not know the decomposition between the cyclical and structural components in Option (b).","ID":"1432","explanation":"","answers":[{"ID":"7260","answer":"Option (c)","correct":"0"},{"ID":"7259","answer":"Option (b)","correct":"0"},{"ID":"7258","answer":"Option (a)","correct":"1"}]},{"question":"3. If private domestic investment is less than private domestic saving and the current account is in deficit then the government fiscal balance will be in deficit no matter what growth rate GDP is generated.","ID":"1433","explanation":"","answers":[{"ID":"7257","answer":"False","correct":"0"},{"ID":"7256","answer":"True","correct":"1"}]}]}, {"ID":"343","name":"Quiz 2015 - 43","added_on":"2015-10-15 01:58:59","questions":[{"question":"1. If the real interest rate (difference between nominal interest rate and inflation) is constant, then a currency-isuing government, which matches its net spending $-for-$ with debt issuance, could double its fiscal deficit without pushing up the public debt ratio.","ID":"1434","explanation":"","answers":[{"ID":"7278","answer":"False","correct":"0"},{"ID":"7277","answer":"True","correct":"1"}]},{"question":"2. The new conservative government of Finland claims that domestic deflation (cutting wages and conditions for workers) will spark an export boom and provide the capacity for the government to run primary surpluses without compromising real economic growth. If Finland did actually achieve positive net exports then the government could push for a primary fiscal surplus knowing it will not compromise growth.","ID":"1435","explanation":"","answers":[{"ID":"7280","answer":"False","correct":"1"},{"ID":"7279","answer":"True","correct":"0"}]},{"question":"3. Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current interest rate target. If on average the government collects an income tax of 20 cents in the dollar, then total tax revenue will rise by 0.20 times $x if government spending increases (once and for all) by $x dollars and private investment and exports remain unchanged.","ID":"1436","explanation":"","answers":[{"ID":"7272","answer":"False","correct":"1"},{"ID":"7271","answer":"True","correct":"0"}]}]}, {"ID":"344","name":"Quiz 2015 - 44","added_on":"2015-10-22 22:19:56","questions":[{"question":"1. National accounting shows us that a government surplus equals a non-government deficit. So if the imposition of fiscal austerity ends up generating a budget surpluses then the national income movements will force households and firms overall to be running deficits.","ID":"1437","explanation":"","answers":[{"ID":"7288","answer":"False","correct":"1"},{"ID":"7287","answer":"True","correct":"0"}]},{"question":"2. A characteristic feature of the neo-liberal period has been the declining share of wages in national income in most nations. However it is not necessary for real wages to grow in the coming years to reverse that trend and real wage cuts under austerity programs could result in an increase the wage share.","ID":"1438","explanation":"","answers":[{"ID":"7292","answer":"False","correct":"0"},{"ID":"7291","answer":"True","correct":"1"}]},{"question":"3. The payment of a positive interest return by the central bank on overnight bank reserves does not eliminate the need for it to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements). ","ID":"1439","explanation":"","answers":[{"ID":"7290","answer":"False","correct":"0"},{"ID":"7289","answer":"True","correct":"1"}]}]}, {"ID":"345","name":"Quiz 2015 - 45","added_on":"2015-10-29 16:52:27","questions":[{"question":"1. A nation can run an external deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit) as long as the private domestic sector is spending less than they are earning.","ID":"1440","explanation":"","answers":[{"ID":"7304","answer":"False","correct":"1"},{"ID":"7303","answer":"True","correct":"0"}]},{"question":"2. To ensure that the financial system is stable, the central bank allows the money supply to be driven by the monetary base.","ID":"1441","explanation":"","answers":[{"ID":"7306","answer":"False","correct":"1"},{"ID":"7305","answer":"True","correct":"0"}]},{"question":"3. Sovereign government spending becomes more costly when the bond markets push up yields on new bond issues.","ID":"1442","explanation":"","answers":[{"ID":"7308","answer":"False","correct":"1"},{"ID":"7307","answer":"True","correct":"0"}]}]}, {"ID":"346","name":"Quiz 2015 - 46","added_on":"2015-11-05 03:29:01","questions":[{"question":"1. Assume that the national accounts of a nation is reveal that its external surplus is equivalent to 2 per cent of GDP and the private domestic sector is saving overall 3 per cent of GDP. We would also observe:nnn.","ID":"1443","explanation":"","answers":[{"ID":"7315","answer":"A fiscal deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"7316","answer":"A fiscal surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"7317","answer":"A fiscal deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"7318","answer":"A fiscal surplus equal to 5 per cent of GDP.","correct":"0"}]},{"question":"2. There is no difference in terms of the impact on aggregate demand, between the government matching its deficit spending with bond issues and a situation where the government instructs the central bank to buy its bonds to match the deficit. ","ID":"1444","explanation":"","answers":[{"ID":"7320","answer":"False","correct":"0"},{"ID":"7319","answer":"True","correct":"1"}]},{"question":"3. The Italian government"s projected fiscal deficit for 2016 will be lower as a percentage of GDP than its estimated 2015 outcome. It is correct to conclude that in 2016 it will still be pursuing a contractionary fiscal policy stance despite the political rhetoric about its fiscal position being expansionary.","ID":"1445","explanation":"","answers":[{"ID":"7322","answer":"False","correct":"1"},{"ID":"7321","answer":"True","correct":"0"}]}]}, {"ID":"347","name":"Quiz 2015 - 47","added_on":"2015-11-12 14:35:46","questions":[{"question":"1. The central bank sets the short-run interest rate, and its associated liquidity management functions puts a limit of the rate it can pay on excess reserves held by the commercial banks.","ID":"1446","explanation":"","answers":[{"ID":"7344","answer":"False","correct":"0"},{"ID":"7343","answer":"True","correct":"1"}]},{"question":"2. Aggregate demand is the sum of all spending components (consumption, investment, government spending, and net exports). In a stock-flow consistent macroeconomics, we know that flows during a period add to relevant stocks. For example, if the flow of consumption spending rose by $200 billion in total in any one year, then if nothing else changes the stock of aggregate demand would rise by the same amount in the first instance (before the multiplier starts to work).","ID":"1447","explanation":"","answers":[{"ID":"7336","answer":"False","correct":"1"},{"ID":"7335","answer":"True","correct":"0"}]},{"question":"3. If the nation is running a current account deficit of 2 per cent of GDP and the government runs a surplus equal to 2 per cent of GDP, then we know that at the current level of GDP, the private domestic sector is not saving overall.","ID":"1448","explanation":"","answers":[{"ID":"7342","answer":"False","correct":"0"},{"ID":"7341","answer":"True","correct":"1"}]}]}, {"ID":"348","name":"Quiz 2015 - 48","added_on":"2015-11-19 01:42:18","questions":[{"question":"1. Assume that the current account deficit of a nation is on average over the business cycle equal to 2 per cent of GDP and that the government manages to run a balanced fiscal position when averaged over the same cycle. We can conclude that on average the private domestic sector overall is spending more than it is earning.","ID":"1449","explanation":"","answers":[{"ID":"7360","answer":"False","correct":"0"},{"ID":"7359","answer":"True","correct":"1"}]},{"question":"2. Trade unions that manage to push aggregate wages growth ahead of the inflation rate will ensure that workers gain a greater share of national income.","ID":"1450","explanation":"","answers":[{"ID":"7352","answer":"False","correct":"1"},{"ID":"7351","answer":"True","correct":"0"}]},{"question":"3. If labour productivity is growing at 2 per cent per annum and the labour force is growing at 1.5 per cent per annum and the average working week is constant in hours, then real GDP growth must be greater than 3.5 per cent per annum or unemployment will rise.","ID":"1451","explanation":"","answers":[{"ID":"7358","answer":"False","correct":"1"},{"ID":"7357","answer":"True","correct":"0"}]}]}, {"ID":"349","name":"Quiz 2015 - 49","added_on":"2015-11-25 18:26:22","questions":[{"question":"1. People are richer they purchase bonds that the government issues to match its net deficit spending relative to a situation where the government just instructed the central bank to ensure all public spending cleared the payments system.","ID":"1452","explanation":"","answers":[{"ID":"7368","answer":"False","correct":"1"},{"ID":"7367","answer":"True","correct":"0"}]},{"question":"2. The sectoral balances perspective of the national accounting framework tells us that the private domestic sector cannot save if a nations external sector is in balance and the government runs a balanced fiscal position (government spending equals its revenue).","ID":"1453","explanation":"","answers":[{"ID":"7375","answer":"False","correct":"1"},{"ID":"7374","answer":"True","correct":"0"}]},{"question":"3. The so-called "progressives" tend to argue that if austerity is to be imposed it is better to increase taxes (particularly on high income earners). Conversely, "conservatives" demand spending cuts and privatisation. In terms of the initial impact on national income, which policy option will be more damaging - a tax increase which aims to increase tax revenue at the current level of national income by $x or a spending cut of $x?","ID":"1454","explanation":"","answers":[{"ID":"7371","answer":"Tax increase","correct":"0"},{"ID":"7372","answer":"Spending cut","correct":"1"},{"ID":"7373","answer":"Both will be equivalent","correct":"0"}]}]}, {"ID":"350","name":"Quiz 2015 - 50","added_on":"2015-12-01 18:54:42","questions":[{"question":"1. The wage share in national income has continued to fall in Australia in the last several years because the growth in nominal wages and salaries has failed to keep pace with the growth in labour productivity.","ID":"1455","explanation":"","answers":[{"ID":"7383","answer":"False","correct":"1"},{"ID":"7382","answer":"True","correct":"0"}]},{"question":"2. The automatic stabilisers work to underpin total spending in times of economic contraction. While the proportion of the fiscal outcome that operates in this way is not directly observable, the estimates provided by institutions such as the OECD and the IMF are overly pessimistic.","ID":"1456","explanation":"","answers":[{"ID":"7385","answer":"False","correct":"0"},{"ID":"7384","answer":"True","correct":"1"}]},{"question":"3. Under current public sector debt-issuance arrangements (where sovereign governments match their deficits with issues of debt), the government and the private domestic sector cannot simultaneously spend less than they earn.","ID":"1457","explanation":"","answers":[{"ID":"7389","answer":"False","correct":"1"},{"ID":"7388","answer":"True","correct":"0"}]}]}, {"ID":"351","name":"Quiz 2015 - 51","added_on":"2015-12-09 18:53:39","questions":[{"question":"1. For the US private sector to reduce its overall overall debt levels, the government must run a deficit.","ID":"1458","explanation":"","answers":[{"ID":"7397","answer":"False","correct":"1"},{"ID":"7396","answer":"True","correct":"0"}]},{"question":"2. Larger fiscal deficits as a percentage of GDP reduce the local productive resources that are available to the private sector.","ID":"1459","explanation":"","answers":[{"ID":"7401","answer":"False","correct":"0"},{"ID":"7400","answer":"True","correct":"1"}]},{"question":"3. A national government that issues its own currency and freely floats it on foreign markets never faces a risk of insolvency.","ID":"1460","explanation":"","answers":[{"ID":"7399","answer":"False","correct":"1"},{"ID":"7398","answer":"True","correct":"0"}]}]}, {"ID":"352","name":"Quiz 2015 - 52","added_on":"2015-12-17 17:40:22","questions":[{"question":"1. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would find:","ID":"1461","explanation":"","answers":[{"ID":"7408","answer":"A fiscal deficit (spending greater than tax receipts)","correct":"1"},{"ID":"7409","answer":"A fiscal surplus (spending less than tax receipts)","correct":"0"},{"ID":"7410","answer":"Cannot determine because we would need to know the scale of the private domestic sector saving as a % of GDP.","correct":"0"}]},{"question":"2. Given that government bonds constitute a component of non-government sector wealth, that sector"s net worth rises if the government issues bonds to match its deficit spending.","ID":"1462","explanation":"","answers":[{"ID":"7412","answer":"False","correct":"1"},{"ID":"7411","answer":"True ","correct":"0"}]},{"question":"3. While fiscal deficits rise due to the operation of the automatic stabilisers, these effects work in a counter-cyclical fashion to ensure that the government fiscal balance returns to its appropriate level once growth resumes.","ID":"1463","explanation":"","answers":[{"ID":"7416","answer":"False","correct":"1"},{"ID":"7415","answer":"True","correct":"0"}]}]}, {"ID":"353","name":"Quiz 2015 - 53","added_on":"2015-12-24 01:43:34","questions":[{"question":"1. A hallmark of the neo-liberal period has been the declining share of wages in national income which in part meant that economic growth became more dependent on credit to maintain growth in consumption spending. Increasing the wage share will require that real wages grow in the coming years.","ID":"1464","explanation":"","answers":[{"ID":"7430","answer":"False","correct":"1"},{"ID":"7429","answer":"True","correct":"0"}]},{"question":"2. In a stock-flow consistent macroeconomics, the sectoral balance stocks all sum to zero.","ID":"1465","explanation":"","answers":[{"ID":"7424","answer":"False","correct":"1"},{"ID":"7423","answer":"True","correct":"0"}]},{"question":"3. A rising household saving ratio combined with an stable external deficit that is draining aggregate spending, doesn"t necessarily mean that the fiscal deficit has to rise to maintain current output growth.","ID":"1466","explanation":"","answers":[{"ID":"7428","answer":"False","correct":"0"},{"ID":"7427","answer":"True","correct":"1"}]}]}, {"ID":"354","name":"Quiz 2016 - 01","added_on":"2015-12-30 21:55:59","questions":[{"question":"1. Issuing government debt reduces the risk of inflation arising from deficit spending because the private sector has less money to spend.","ID":"1467","explanation":"","answers":[{"ID":"7440","answer":"False","correct":"1"},{"ID":"7439","answer":"True","correct":"0"}]},{"question":"2. A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","ID":"1468","explanation":"","answers":[{"ID":"7442","answer":"False","correct":"0"},{"ID":"7441","answer":"True","correct":"1"}]},{"question":"3. If a government wants to reduce the public debt ratio, then it has to eventually run primary fiscal surpluses (that is, spend less than they raise in taxes).","ID":"1469","explanation":"","answers":[{"ID":"7438","answer":"False","correct":"1"},{"ID":"7437","answer":"True","correct":"0"}]}]}, {"ID":"355","name":"Quiz 2016 - 02","added_on":"2016-01-05 04:11:58","questions":[{"question":"1. As a matter of accounting, the financial assets held by the non-government sector rise $-for-$ when a sovereign government issues debt.","ID":"1470","explanation":"","answers":[{"ID":"7454","answer":"False","correct":"1"},{"ID":"7453","answer":"True","correct":"0"}]},{"question":"2. When government bond yields for new issues start to rise, government spending becomes more expensive.","ID":"1471","explanation":"","answers":[{"ID":"7452","answer":"False","correct":"1"},{"ID":"7451","answer":"True","correct":"0"}]},{"question":"3. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the domestic private sector cannot bring its spending more closely in line with its income by increasing saving without incurring employment losses.","ID":"1472","explanation":"","answers":[{"ID":"7458","answer":"False","correct":"0"},{"ID":"7457","answer":"True","correct":"1"}]}]}, {"ID":"356","name":"Quiz 2016 - 03","added_on":"2016-01-14 19:21:27","questions":[{"question":"1. When the government matches an increase in deficit spending with debt issued to the private sector, the growth in aggregate demand is less than would be the case if the government didn"t borrow at all.","ID":"1473","explanation":"","answers":[{"ID":"7459","answer":"True","correct":"0"},{"ID":"7460","answer":"False","correct":"1"}]},{"question":"2. If the central bank regulated that banks have to hold reserve equivalent to their outstanding loans this would restrict lending.","ID":"1474","explanation":"","answers":[{"ID":"7461","answer":"True","correct":"0"},{"ID":"7462","answer":"False ","correct":"1"}]},{"question":"3. In the context of population ageing, the fact that a sovereign government is never financially constrained means that it can always provide first-class health care to its citizens should the political circumstances permit.","ID":"1475","explanation":"","answers":[{"ID":"7463","answer":"True","correct":"0"},{"ID":"7464","answer":"False","correct":"1"}]}]}, {"ID":"357","name":"Quiz 2016 - 04","added_on":"2016-01-21 20:10:36","questions":[{"question":"1. Many progressive commentators believe that bank lending should be more closely regulated to ensure that all bank loans were backed by reserves held at the bank. However, this would unnecessarily reduce the capacity of the banks to lend.","ID":"1476","explanation":"","answers":[{"ID":"7465","answer":"True","correct":"0"},{"ID":"7466","answer":"False","correct":"1"}]},{"question":"2. Assume a nation is running an external surplus equivalent to 2 per cent of GDP and the private domestic sector is currently saving overall 1 per cent of GDP. In this situation, the government must be running:","ID":"1477","explanation":"","answers":[{"ID":"7480","answer":"A fiscal surplus equal to 3 per cent of GDP.","correct":"0"},{"ID":"7479","answer":"A fiscal deficit equal to 3 per cent of GDP.","correct":"0"},{"ID":"7478","answer":"A fiscal surplus equal to 1 per cent of GDP.","correct":"1"},{"ID":"7477","answer":"A fiscal deficit equal to 1 per cent of GDP.","correct":"0"}]},{"question":"3. 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 of GDP. If the fiscal balance stays constant as a percent of GDP and the external surplus rises to the equivalent of 4 per cent of GDP then:","ID":"1478","explanation":"","answers":[{"ID":"7471","answer":"National income rises and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"7472","answer":"National income remains unchanged and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"7473","answer":"National income falls and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"7474","answer":"National income rises and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"1"},{"ID":"7475","answer":"National income remains unchanged and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP","correct":"0"},{"ID":"7476","answer":"National income falls and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"}]}]}, {"ID":"358","name":"Quiz 2016 - 05","added_on":"2016-01-28 18:18:31","questions":[{"question":"1. Workers can enjoy a stable share of national income over time if they secure wage and salary increases in line with the growth in their contribution to production (labour productivity).","ID":"1479","explanation":"","answers":[{"ID":"7488","answer":"False","correct":"1"},{"ID":"7487","answer":"True","correct":"0"}]},{"question":"2. The tax revenue a government takes in each period has no bearing on the real spending capacity of a sovereign government.","ID":"1480","explanation":"","answers":[{"ID":"7490","answer":"False","correct":"1"},{"ID":"7489","answer":"True","correct":"0"}]},{"question":"3. The government sector and the private domestic sector can simultaneously net save (under current public sector debt-issuance arrangements).","ID":"1481","explanation":"","answers":[{"ID":"7496","answer":"False","correct":"0"},{"ID":"7495","answer":"True","correct":"1"}]}]}, {"ID":"359","name":"Quiz 2016 - 06","added_on":"2016-02-04 01:55:53","questions":[{"question":"1. If a nation records an external balance (net exports equal zero) and the government runs a balanced fiscal position then we know that private domestic sector spending will be equal to its overall income and household saving will be zero.","ID":"1482","explanation":"","answers":[{"ID":"7504","answer":"False","correct":"1"},{"ID":"7503","answer":"True","correct":"0"}]},{"question":"2. The standard of living of workers falls if growth in real wages fails to keep pace with labour productivity growth.","ID":"1483","explanation":"","answers":[{"ID":"7506","answer":"False","correct":"1"},{"ID":"7505","answer":"True","correct":"0"}]},{"question":"3. Rising private domestic saving overall signals the need for an expanding public deficit to avoid employment losses.","ID":"1484","explanation":"","answers":[{"ID":"7508","answer":"False","correct":"1"},{"ID":"7507","answer":"True","correct":"0"}]}]}, {"ID":"360","name":"Quiz 2016 - 07","added_on":"2016-02-11 21:53:32","questions":[{"question":"1. If the fiscal balance of a currency-issuing national government moves into surplus:","ID":"1485","explanation":"","answers":[{"ID":"7515","answer":"It is a sign that the government is trying to constrain economic activity.","correct":"0"},{"ID":"7516","answer":"It is a sign that the government is worried that inflation is rising.","correct":"0"},{"ID":"7517","answer":"You cannot conclude anything about the government"s policy intentions.","correct":"1"},{"ID":"7518","answer":"Options (a) and (b).","correct":"0"}]},{"question":"2. A nation that continues to record an external surplus due to strong net exports can safely run a fiscal surplus without impeding economic growth.","ID":"1486","explanation":"","answers":[{"ID":"7525","answer":"False","correct":"1"},{"ID":"7524","answer":"True","correct":"0"}]},{"question":"3. In Year 1, we observe a subdued inflation rate of 1 per cent per annum. At the start of the year, the outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). The economy plunges into recession with nominal GDP growth falling by 1 per cent. As a result, the government"s fiscal balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the public debt ratio rises by 3 per cent. In Year 2, the government stimulates the economy and doubles the primary fiscal deficit relative to GDP and, in doing so, stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio will rise but by an amount less than the rise in the fiscal deficit because of the real growth in the economy.","ID":"1487","explanation":"","answers":[{"ID":"7522","answer":"False","correct":"1"},{"ID":"7521","answer":"True ","correct":"0"},{"ID":"7523","answer":"Not enough information to make a conclusion","correct":"0"}]}]}, {"ID":"361","name":"Quiz 2016 - 08","added_on":"2016-02-18 21:13:06","questions":[{"question":"1. If the private domestic sector spends less than it earns and the nation runs a small external deficit, then the government fiscal position will always be in deficit at all levels of national income.","ID":"1488","explanation":"","answers":[{"ID":"7539","answer":"False","correct":"0"},{"ID":"7538","answer":"True","correct":"1"}]},{"question":"2. Under current institutional arrangements, a central bank can easily purchase treasury debt directly to satisfy accounting arrangements relating to the national governments fiscal deficit (that is, monetise the deficit) while still targeting a positive short-term policy rate.","ID":"1489","explanation":"","answers":[{"ID":"7535","answer":"False","correct":"0"},{"ID":"7534","answer":"True","correct":"1"}]},{"question":"3. Assume the current public debt to GDP ratio is 100 per cent and that central banks keep nominal interest rates and inflation constant and zero. Governments that promote fiscal austerity, claim they can reduce the the public debt to GDP ratio by pushing the primary fiscal position (balance net of interest payments on outstanding debt) into surplus even if the austerity cause real GDP growth to fall into recession. Under the circumstances outlined, this claim is correct.","ID":"1490","explanation":"","answers":[{"ID":"7537","answer":"False","correct":"0"},{"ID":"7536","answer":"True","correct":"1"}]}]}, {"ID":"362","name":"Quiz 2016 - 09","added_on":"2016-02-25 16:39:51","questions":[{"question":"1. A national government which issues its own floating currency is never vulnerable for financial reasons to defaulting on its own outstanding debt.","ID":"1491","explanation":"","answers":[{"ID":"7547","answer":"False","correct":"1"},{"ID":"7546","answer":"True ","correct":"0"}]},{"question":"2. If the household saving ratio rises and there is an external deficit, then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"1492","explanation":"","answers":[{"ID":"7549","answer":"False","correct":"1"},{"ID":"7548","answer":"True ","correct":"0"}]},{"question":"3. Quantitative easing and an expansion of net public spending both add net financial assets to the non-government sector but the former aims to stimulate demand by lowering interest rates while the latter policy choice directly adds spending to the economy.","ID":"1493","explanation":"","answers":[{"ID":"7551","answer":"False","correct":"1"},{"ID":"7550","answer":"True ","correct":"0"}]}]}, {"ID":"363","name":"Quiz 2016 - 10","added_on":"2016-03-03 18:01:04","questions":[{"question":"1. The mainstream macroeconomics conception of the banking system characterised by the concept of the money multiplier posits that changes in the monetary base are driven by changes in the money supply.","ID":"1494","explanation":"","answers":[{"ID":"7563","answer":"False","correct":"1"},{"ID":"7562","answer":"True","correct":"0"},{"ID":"7564","answer":"Only in the absence of a liquidity trap","correct":"0"}]},{"question":"2. If the nation is running a current account deficit which is accompanied by a government sector surplus of equal size, then the private domestic sector will always be spending more than its income.","ID":"1495","explanation":"","answers":[{"ID":"7561","answer":"False","correct":"0"},{"ID":"7560","answer":"True","correct":"1"}]},{"question":"3. With the Eurozone nations unable to gain competitive relief via nominal exchange rate adjustments the hope is that by deflating wages and prices real unit labour costs will fall. Assuming other nations do nothing and wages and prices in one nation fall at the same rate, then a real exchange rate depreciation (relative to other nations) requires labour productivity and employment growth to rise.","ID":"1496","explanation":"","answers":[{"ID":"7566","answer":"False","correct":"1"},{"ID":"7565","answer":"True","correct":"0"}]}]}, {"ID":"364","name":"Quiz 2016 - 11","added_on":"2016-03-10 16:17:40","questions":[{"question":"1. Money is often considered to be currency plus demand deposits. If there is more money in the economy its value always declines.","ID":"1497","explanation":"","answers":[{"ID":"7574","answer":"False","correct":"1"},{"ID":"7573","answer":"True","correct":"0"}]},{"question":"2. A public works program that digs holes and fills them in again has exactly the same impact on current economic growth ($-for-$) as a private investment plan which constructs a new factory.","ID":"1498","explanation":"","answers":[{"ID":"7576","answer":"False","correct":"0"},{"ID":"7575","answer":"True","correct":"1"}]},{"question":"3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.","ID":"1499","explanation":"","answers":[{"ID":"7578","answer":"False","correct":"0"},{"ID":"7577","answer":"True","correct":"1"}]}]}, {"ID":"365","name":"Quiz 2016 - 12","added_on":"2016-03-17 19:39:33","questions":[{"question":"1. If a national currency-issuing government stopped issuing public debt, then its deficit spending would be more expansionary than if it matched the deficits with new debt issues.","ID":"1500","explanation":"","answers":[{"ID":"7586","answer":"False","correct":"1"},{"ID":"7585","answer":"True","correct":"0"}]},{"question":"2. If the external sector is in surplus and thus is contributing to domestic economic growth, then the national government must run a fiscal surplus to stop the economy overheating.","ID":"1501","explanation":"","answers":[{"ID":"7588","answer":"False","correct":"1"},{"ID":"7587","answer":"True","correct":"0"}]},{"question":"3. On the day that the government issues debt to match ($-for-$) the increase in its deficit, non-government sector net worth increases.","ID":"1502","explanation":"","answers":[{"ID":"7590","answer":"False","correct":"1"},{"ID":"7589","answer":"True","correct":"0"}]}]}, {"ID":"366","name":"Quiz 2016 - 13","added_on":"2016-03-24 17:28:48","questions":[{"question":"1. A fact that is overlooked by those promoting austerity programs, is that when economic growth resumes, the automatic stabilisers work in a counter-cyclical fashion to ensure that the government fiscal balance returns to its appropriate level.","ID":"1503","explanation":"","answers":[{"ID":"7598","answer":"False","correct":"1"},{"ID":"7597","answer":"True","correct":"0"}]},{"question":"2. Rising government bond yields for new issues indicate:","ID":"1504","explanation":"","answers":[{"ID":"7613","answer":"Answers (a) and (d) depending on the situation.","correct":"0"},{"ID":"7612","answer":"that private investors consider public debt to be riskier.","correct":"0"},{"ID":"7611","answer":"that government spending is increasing the cost of borrowing for private investors.","correct":"0"},{"ID":"7610","answer":"that economic growth is reducing private risk assessments of alternative financial investments.","correct":"0"},{"ID":"7609","answer":"that government spending is becoming more expensive.","correct":"0"},{"ID":"7614","answer":"Answers (b) and (d) depending on the situation.","correct":"1"}]},{"question":"3. When the national government"s fiscal balance moves into surplus:nnnn","ID":"1505","explanation":"","answers":[{"ID":"7605","answer":"it is a sign that the government is trying to constrain economic activity.","correct":"0"},{"ID":"7606","answer":"it is a sign that the government is worried that inflation is rising.","correct":"0"},{"ID":"7607","answer":"you cannot conclude anything about the government"s policy intentions.","correct":"1"},{"ID":"7608","answer":"Options (a) and (b).","correct":"0"}]}]}, {"ID":"367","name":"Quiz 2016 - 14","added_on":"2016-03-31 02:22:53","questions":[{"question":"1. The only time that fiscal surplus represents increased national savings is when the government creates a sovereign fund. ","ID":"1506","explanation":"","answers":[{"ID":"7622","answer":"False","correct":"1"},{"ID":"7621","answer":"True","correct":"0"}]},{"question":"2. The massive build-up of Chinese holdings of US government debt indicates that Chinese investors have been funding the US government deficits.","ID":"1507","explanation":"","answers":[{"ID":"7628","answer":"False","correct":"1"},{"ID":"7627","answer":"True","correct":"0"}]},{"question":"3. If employment growth matches the pace of growth in the civilian population (people above 15 years of age) then the economy will experience a constant unemployment rate as long as participation rates do not change.","ID":"1508","explanation":"","answers":[{"ID":"7626","answer":"False","correct":"0"},{"ID":"7625","answer":"True","correct":"1"}]}]}, {"ID":"368","name":"Quiz 2016 - 15","added_on":"2016-04-07 20:15:21","questions":[{"question":"1. Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy settings. Then, if government spending increases by $X dollars and private investment and exports are unchanged, we know, as a result of our understanding of the expenditure multiplier, that nominal GDP will grow until the sum of taxation revenue, import spending and household saving rises by exactly $X dollars.","ID":"1509","explanation":"","answers":[{"ID":"7647","answer":"False","correct":"0"},{"ID":"7646","answer":"True","correct":"1"}]},{"question":"2. When a currency-issuing government voluntarily constrains itself to borrow from the non-government sector to cover its fiscal deficit, it substitutes its spending for the borrowed funds and reduces the private capacity to borrow and spend.","ID":"1510","explanation":"","answers":[{"ID":"7645","answer":"False","correct":"1"},{"ID":"7644","answer":"True ","correct":"0"}]},{"question":"3. The crucial difference between a monetary system based on the convertible currency backed by gold and a fiat currency monetary is:nnnn","ID":"1511","explanation":"","answers":[{"ID":"7639","answer":"that under the former system, excessive national government spending led to inflation.","correct":"0"},{"ID":"7640","answer":"that under the former system, the national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"7641","answer":"that under the former system, the national government could not use net spending to achieve full employment.","correct":"0"}]}]}, {"ID":"369","name":"Quiz 2016 - 16","added_on":"2016-04-13 23:38:03","questions":[{"question":"1. 1 The IMF and the OECD equate the Non-Accelerating Inflation Rate of Unemployment (NAIRU) with their concept of full employment and they use the NAIRU to calibrate their structural deficit estimates. Accordingly, their estimates of the structural deficits will typically be:","ID":"1512","explanation":"","answers":[{"ID":"7671","answer":"difficult to assess because their forecasts are subject to forecasting inaccuracy.","correct":"0"},{"ID":"7670","answer":"biased upwards thus indicating, at any point in the economic cycle, that the government fiscal stance is more expansionary than it actually is.","correct":"1"},{"ID":"7669","answer":"biased downwards thus indicating, at any point in the economic cycle, that the government fiscal stance is less expansionary than it actually is.","correct":"0"}]},{"question":"2. 3. Under a fiat monetary system, the absence of currency convertibility means that:n","ID":"1513","explanation":"","answers":[{"ID":"7668","answer":"the currency is only convertible into government bonds rather than gold.","correct":"0"},{"ID":"7667","answer":"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.","correct":"1"},{"ID":"7666","answer":"there is no reason for people to hold currency as a hedge against a falling gold price.","correct":"0"}]},{"question":"3. When a sovereign government issues debt it logically:","ID":"1514","explanation":"","answers":[{"ID":"7665","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"},{"ID":"7664","answer":"has no impact on the overall holdings of net financial assets in the non-government sector $-for-$.","correct":"1"},{"ID":"7663","answer":"increases the net financial assets that are held by the non-government sector $-for-$.","correct":"0"}]}]}, {"ID":"370","name":"Quiz 2016 - 17","added_on":"2016-04-21 19:16:27","questions":[{"question":"1. A fiscal deficit equivalent to 5 per cent of GDP always signals a more expansionary fiscal intent from government than a deficit outcome equivalent to 3 per cent of GDP.","ID":"1515","explanation":"","answers":[{"ID":"7679","answer":"False","correct":"1"},{"ID":"7678","answer":"True","correct":"0"}]},{"question":"2. Government deficit spending which is accompanied by a bond sale to the non-government sector adds less to aggregate demand than would be the case if there was no bond sale accompanying the deficit.","ID":"1516","explanation":"","answers":[{"ID":"7681","answer":"False","correct":"1"},{"ID":"7680","answer":"True","correct":"0"}]},{"question":"3. If the external balance is always in surplus, then the government can safely run a surplus and not impede economic growth.","ID":"1517","explanation":"","answers":[{"ID":"7683","answer":"False","correct":"1"},{"ID":"7682","answer":"True","correct":"0"}]}]}, {"ID":"371","name":"Quiz 2016 - 18","added_on":"2016-04-28 07:00:52","questions":[{"question":"1. The National Accounts tell us that total spending is the sum of household consumption, private investment, government spending and net exports. To understand this in terms of a stock-flow consistent macroeconomics, where we have to always trace the impact of flows during a period on the relevant stocks at the end of the period, we would interpret the spending components as flows that add to the stock of aggregate demand (spending) which in turn impacts on the final production (Gross Domestic Product) and national income.","ID":"1518","explanation":"","answers":[{"ID":"7703","answer":"False","correct":"1"},{"ID":"7702","answer":"True","correct":"0"}]},{"question":"2. Imposing some positive minimum reserve requirements constrains the credit creation activities of the private banks relative to a situation where no requirements were set other than the rule that reserve balances could not be negative.","ID":"1519","explanation":"","answers":[{"ID":"7705","answer":"False","correct":"1"},{"ID":"7704","answer":"True","correct":"0"}]},{"question":"3. Adopting internal devaluation (reducing wages and prices) for nations that cannot adjust their exchange rate (for example, Greece), while harsh, ultimately improves the nation"s international competitiveness.","ID":"1520","explanation":"","answers":[{"ID":"7707","answer":"False","correct":"1"},{"ID":"7706","answer":"True","correct":"0"}]}]}, {"ID":"372","name":"Quiz 2016 - 19","added_on":"2016-04-28 07:02:38","questions":[{"question":"1. If the external sector is in deficit overall and real GDP growth rate is higher than the current real interest rate, then:","ID":"1521","explanation":"","answers":[{"ID":"7708","answer":"Both the private domestic sector and the government sector overall can reduce their respective net debt liabilities.","correct":"0"},{"ID":"7709","answer":"Either the private domestic sector and the government sector overall can reduce their respective net debt liabilities.","correct":"1"},{"ID":"7710","answer":"Neither the private domestic sector and the government sector overall can reduce their respective net debt liabilities.","correct":"0"}]},{"question":"2. The debt of a currency-issuing government with a floating exchange rate is not really a liability because the government can just continuously roll the debt 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.","ID":"1522","explanation":"","answers":[{"ID":"7712","answer":"False","correct":"1"},{"ID":"7711","answer":"True","correct":"0"}]},{"question":"3. The fact that large scale quantitative easing conducted by central banks in Japan, the UK, USA and more recently, in Europe 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.","ID":"1523","explanation":"","answers":[{"ID":"7714","answer":"False","correct":"1"},{"ID":"7713","answer":"True","correct":"0"}]}]}, {"ID":"373","name":"Quiz 2016 - 20","added_on":"2016-04-28 07:04:12","questions":[{"question":"1. Mainstream economists use the notion of \\\"crowding out\\\" to argue that public spending squeezes out private spending and results in a less efficient allocation of resources overall. Modern Monetary Theory (MMT) accepts that crowding out can occur.","ID":"1524","explanation":"","answers":[{"ID":"7716","answer":"False","correct":"0"},{"ID":"7715","answer":"True","correct":"1"}]},{"question":"2. A rising government deficit will always allow the private domestic sector to increase its overall saving in nominal terms.","ID":"1525","explanation":"","answers":[{"ID":"7726","answer":"False","correct":"1"},{"ID":"7725","answer":"True","correct":"0"}]},{"question":"3. Assume the government increases spending by $100 billion in the each of the next three years from now. Economists estimate the spending multiplier to be 1.5 and the impact is immediate and exhausted in each year. They also estimate the tax multiplier (which captures the impact of rising tax rates on GDP) to be equal to 1 and the current average tax rate is equal to 30 per cent. What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"1526","explanation":"","answers":[{"ID":"7719","answer":"$135 billion","correct":"0"},{"ID":"7720","answer":"$150 billion","correct":"0"},{"ID":"7721","answer":"$315 billion","correct":"0"},{"ID":"7722","answer":"$450 billion","correct":"1"}]}]}, {"ID":"374","name":"Quiz 2016 - 21","added_on":"2016-05-19 03:49:31","questions":[{"question":"1. Mainstream economists use the notion of \\\"crowding out\\\" to argue that public spending squeezes out private spending and results in a less efficient allocation of resources overall. Modern Monetary Theory (MMT) denies that crowding out can occur.","ID":"1527","explanation":"","answers":[{"ID":"7734","answer":"False","correct":"1"},{"ID":"7733","answer":"True","correct":"0"}]},{"question":"2. A rising government deficit will always allow the private domestic sector to increase its saving in nominal terms.","ID":"1528","explanation":"","answers":[{"ID":"7740","answer":"False","correct":"1"},{"ID":"7739","answer":"True","correct":"0"}]},{"question":"3. If government net spending increases (rising fiscal deficit) then the policy stance is becoming more expansionary and the only risk is that nominal aggregate spending growth might exceed the real capacity of the economy to respond by increasing real output and cause inflation.","ID":"1529","explanation":"","answers":[{"ID":"7738","answer":"False","correct":"1"},{"ID":"7737","answer":"True","correct":"0"}]}]}, {"ID":"375","name":"Quiz 2016 - 22","added_on":"2016-05-26 04:04:56","questions":[{"question":"1. Higher levels of taxation are necessary to permit the government to spend more in real terms.","ID":"1530","explanation":"","answers":[{"ID":"7748","answer":"False","correct":"0"},{"ID":"7747","answer":"True","correct":"0"},{"ID":"7749","answer":"Perhaps","correct":"1"}]},{"question":"2. If a nation is recording a current account deficit, and its private domestic sector tries to increase its saving overall as a percentage of GDP, then income adjustments will ensure the government fiscal balance is in deficit.","ID":"1531","explanation":"","answers":[{"ID":"7761","answer":"False","correct":"0"},{"ID":"7760","answer":"True","correct":"1"}]},{"question":"3. The reason that IMF and OECD estimates of structural fiscal deficits are to be treated with suspicion relates to the fact that typically the implicit estimates of potential GDP are too optimistic.","ID":"1532","explanation":"","answers":[{"ID":"7759","answer":"False","correct":"1"},{"ID":"7758","answer":"True","correct":"0"}]}]}, {"ID":"376","name":"Quiz 2016 - 23","added_on":"2016-06-02 19:06:56","questions":[{"question":"1. Government deficit spending which is accompanied by a bond sale to the private sector initially adds less to aggregate spending than would be the case if there was no bond sale.","ID":"1534","explanation":"","answers":[{"ID":"7769","answer":"False","correct":"1"},{"ID":"7768","answer":"True","correct":"0"}]},{"question":"2. Assume the government increases spending by $100 billion in the each of the next three years from now. Economists estimate the spending multiplier to be 1.5 and the impact is immediate and exhausted in each year. They also estimate the tax multiplier to be equal to 1 and the current tax rate is equal to 30 per cent (30 cents in the $). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"1535","explanation":"","answers":[{"ID":"7770","answer":"$135 billion","correct":"0"},{"ID":"7771","answer":"$150 billion","correct":"0"},{"ID":"7772","answer":"$315 billion","correct":"0"},{"ID":"7773","answer":"$450 billion","correct":"1"}]},{"question":"3. In a stock-flow consistent macroeconomics, we have to always trace the impact of flows during a period on the relevant stocks at the end of the period. Accordingly, government and private investment spending are two examples of flows that adds to the stock of aggregate demand (spending) which in turn impacts on GDP.","ID":"1536","explanation":"","answers":[{"ID":"7775","answer":"False","correct":"1"},{"ID":"7774","answer":"True","correct":"0"}]}]}, {"ID":"377","name":"Quiz 2016 - 24","added_on":"2016-06-09 04:55:49","questions":[{"question":"1. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.","ID":"1537","explanation":"","answers":[{"ID":"7783","answer":"False","correct":"1"},{"ID":"7782","answer":"True","correct":"0"}]},{"question":"2. One important lesson to be drawn from Modern Monetary Theory (MMT), which is overlooked in the public call for austerity programs, is that when economic growth resumes, the automatic stabilisers work in a counter-cyclical fashion to ensure that the government fiscal balance returns to its appropriate level.","ID":"1538","explanation":"","answers":[{"ID":"7795","answer":"False","correct":"1"},{"ID":"7794","answer":"True","correct":"0"}]},{"question":"3. It is claimed that Eurozone Member States need to rely on internal devaluation. Austerity programs thus aim to deflate nominal wages and prices in order to restore international competitiveness. Which of the following propositions must also follow according to this logic?nnnn","ID":"1539","explanation":"","answers":[{"ID":"7792","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and what happens to employment is irrelevant.","correct":"1"},{"ID":"7791","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and employment must grow.","correct":"0"},{"ID":"7790","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and employment remain constant or grow.","correct":"0"},{"ID":"7793","answer":"None of the above.","correct":"0"}]}]}, {"ID":"378","name":"Quiz 2016 - 25","added_on":"2016-06-16 06:59:50","questions":[{"question":"1. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.","ID":"1540","explanation":"","answers":[{"ID":"7803","answer":"False","correct":"0"},{"ID":"7802","answer":"True","correct":"1"}]},{"question":"2. For a nation running a current account deficit, national income adjustments will ensure government fiscal balance is in deficit if the domestic private sector seeks to increase its saving overall as a percentage of GDP.","ID":"1541","explanation":"","answers":[{"ID":"7805","answer":"False","correct":"0"},{"ID":"7804","answer":"True","correct":"1"}]},{"question":"3. If the central bank pays a positive interest rate on excess bank reserves then it no longer has to conduct open market operations to ensure a non-zero target policy rate is sustained. ","ID":"1542","explanation":"","answers":[{"ID":"7809","answer":"False","correct":"1"},{"ID":"7808","answer":"True","correct":"0"}]}]}, {"ID":"379","name":"Quiz 2016 - 26","added_on":"2016-06-23 18:51:05","questions":[{"question":"1. The more public debt a sovereign government voluntarily issues to match its fiscal deficits:","ID":"1543","explanation":"","answers":[{"ID":"7816","answer":"the less is the volume of investment funds in the non-government sector that can be used for other investments.","correct":"0"},{"ID":"7817","answer":"the greater is non-government wealth held in the form of public debt.","correct":"1"},{"ID":"7818","answer":"the more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"}]},{"question":"2. When an external deficit and public deficit coincide, there must be a private sector deficit, which means that governments can only really run fiscal deficits safely to support a private sector surplus, when net exports are strong.","ID":"1544","explanation":"","answers":[{"ID":"7820","answer":"False","correct":"1"},{"ID":"7819","answer":"True","correct":"0"}]},{"question":"3. In a standard fixed coupon government bond auction, the higher is the demand for the bonds:","ID":"1545","explanation":"","answers":[{"ID":"7826","answer":"the lower will be the yields on the issued bond, which tells us nothing about the effect of fiscal deficits on short-term interest rates.","correct":"1"},{"ID":"7825","answer":"the lower will be the yields on the issued bond, suggesting that higher fiscal deficits drive short-term interest rates down.","correct":"0"},{"ID":"7824","answer":"the higher will be the yields on the issued bond, suggesting higher fiscal deficits drive short-term interest rates down.","correct":"0"}]}]}, {"ID":"380","name":"Quiz 2016 - 27","added_on":"2016-06-30 05:08:23","questions":[{"question":"1. If there is more \\\"money\\\" in the economy its value will decline.","ID":"1546","explanation":"","answers":[{"ID":"7834","answer":"False","correct":"1"},{"ID":"7833","answer":"True","correct":"0"}]},{"question":"2. If national government public works expenditure leads to the construction of a road, which the government proceeds to tear up and rebuild next year, then there is no net gain for society the second time round.","ID":"1547","explanation":"","answers":[{"ID":"7836","answer":"False","correct":"1"},{"ID":"7835","answer":"True","correct":"0"}]},{"question":"3. Consumption adds to aggregate demand and imports drain aggregate demand. The marginal propensity to consume (MPC) is conceptually the extra consumption that is induced for every extra dollar of national income. The marginal propensity to import (MPM) is similarly the extra spending on imports that is induced for every extra dollar of national income. If the MPC and MPM both rise by 0.1 then the impact on aggregate demand for every new dollar of national income generated will be neutral.","ID":"1548","explanation":"","answers":[{"ID":"7838","answer":"False","correct":"1"},{"ID":"7837","answer":"True","correct":"0"}]}]}, {"ID":"381","name":"Quiz 2016 - 28","added_on":"2016-07-07 20:39:19","questions":[{"question":"1. Given government bonds represent a source of wealth for the non-government purchaser, a decision to allow the central bank to directly purchase government bonds to exactly match ($-for-$) the increase in net public spending will, initially, result in lower net worth for the non-government sector relative to the situation where the government sells the bonds to the private markets.","ID":"1549","explanation":"","answers":[{"ID":"7853","answer":"False","correct":"1"},{"ID":"7852","answer":"True","correct":"0"}]},{"question":"2. Assume that a national is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would always find:n","ID":"1550","explanation":"","answers":[{"ID":"7859","answer":"Cannot tell because we don"t know the scale of the private domestic sector saving as a % of GDP.","correct":"0"},{"ID":"7857","answer":"A fiscal deficit (public spending greater than revenue).","correct":"1"},{"ID":"7858","answer":"A fiscal surplus (public spending less than revenue).","correct":"0"}]},{"question":"3. If we assume that inflation and nominal interest rates are both zero and constant (not to different to reality), and consider a country with a public debt to GDP ratio of 100 per cent which the mainstream economists consider to be dangerously high. The mainstream prescription is to run primary fiscal surpluses (public spending net of interest payments greater than tax revenue) to stabilise and then reduce the debt ratio. Under the circumstances given, this strategy will only work if there is real GDP growth to generate the necessary extra tax revenue.","ID":"1551","explanation":"","answers":[{"ID":"7851","answer":"False","correct":"1"},{"ID":"7850","answer":"True","correct":"0"}]}]}, {"ID":"382","name":"Quiz 2016 - 29","added_on":"2016-07-14 05:00:43","questions":[{"question":"1. A fiscal deficit equivalent to 2 per cent of GDP signals that the government is adopting a less expansionary policy stance than if the fiscal deficit outcome was equivalent to 3 per cent of GDP.","ID":"1552","explanation":"","answers":[{"ID":"7867","answer":"False","correct":"1"},{"ID":"7866","answer":"True","correct":"0"}]},{"question":"2. When the government borrows from the non-government sector to match an increase in net public spending (deficit increase), the resulting increase in aggregate spending is less than would be the case if there was no bond sale.","ID":"1553","explanation":"","answers":[{"ID":"7869","answer":"False","correct":"1"},{"ID":"7868","answer":"True","correct":"0"}]},{"question":"3. Consider the following table which describes four different economies in terms of the behavioural parameters relating to the leakages to aggregate demand.nnAssume that in all four economies, there is idle capacity, the central bank holds all interest rates constant, inflation is constant and there is no changes in international competitiveness.nn\\\"\\\"n
nnWhich economy would deliver the largest national income bonus for a given discretionary expansion in government spending (ignore the possibility of longer term wealth effects)?","ID":"1554","explanation":"","answers":[{"ID":"7877","answer":"Economy D","correct":"0"},{"ID":"7876","answer":"Economy C","correct":"0"},{"ID":"7875","answer":"Economy B","correct":"0"},{"ID":"7874","answer":"Economy A","correct":"1"}]}]}, {"ID":"383","name":"Quiz 2016 - 30","added_on":"2016-07-20 05:15:51","questions":[{"question":"1. The price at which the central bank provides reserves to the commercial banks is restricted by its target monetary policy rate. ","ID":"1555","explanation":"","answers":[{"ID":"7885","answer":"False","correct":"0"},{"ID":"7884","answer":"True","correct":"1"}]},{"question":"2. It would be impossible for a central bank to directly purchase treasury debt to facilitate the national governments fiscal deficit (that is, \\\"monetise the deficit\\\") while still targeting a positive short-term policy rate.","ID":"1556","explanation":"","answers":[{"ID":"7891","answer":"False","correct":"1"},{"ID":"7890","answer":"True","correct":"0"}]},{"question":"3. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues. ","ID":"1557","explanation":"","answers":[{"ID":"7889","answer":"False","correct":"1"},{"ID":"7888","answer":"True","correct":"0"}]}]}, {"ID":"384","name":"Quiz 2016 - 31","added_on":"2016-07-28 04:46:06","questions":[{"question":"1. Modern Monetary Theory accepts that continually expanding the money supply will inevitably be inflationary.","ID":"1558","explanation":"","answers":[{"ID":"7899","answer":"False","correct":"1"},{"ID":"7898","answer":"True","correct":"0"}]},{"question":"2. If there is an external deficit of 2 per cent of GDP and the government balances its fiscal outcome then the private sector will have an excess of spending relative to its income equal to 2 per cent of GDP.","ID":"1559","explanation":"","answers":[{"ID":"7905","answer":"False","correct":"0"},{"ID":"7904","answer":"True","correct":"1"}]},{"question":"3. A national government would be unable to rely on the central bank purchasing treasury debt to match its fiscal deficit if the central bank is targeting a positive short-term policy rate.","ID":"1560","explanation":"","answers":[{"ID":"7901","answer":"False","correct":"1"},{"ID":"7900","answer":"True","correct":"0"}]}]}, {"ID":"385","name":"Quiz 2016 - 32","added_on":"2016-08-04 18:34:36","questions":[{"question":"1. If the national accounts of a nation reveal that its external surplus is equivalent to 2 per cent of GDP and the private domestic sector is saving overall 3 per cent of GDP then we would also observe:","ID":"1561","explanation":"","answers":[{"ID":"7914","answer":"A fiscal deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"7915","answer":"A fiscal surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"7916","answer":"A fiscal deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"7917","answer":"A fiscal surplus equal to 5 per cent of GDP.","correct":"0"}]},{"question":"2. The British government"s fiscal deficit rose despite the Conservative government"s stated fiscal austerity stance. We can conclude from that fact that the austerity mantra of the British government doesn"t correctly describe its fiscal policy stance.","ID":"1562","explanation":"","answers":[{"ID":"7913","answer":"False","correct":"1"},{"ID":"7912","answer":"True","correct":"0"}]},{"question":"3. In Year 1, the economy plunges into recession with nominal GDP growth falling to minus 1 per cent. The inflation rate is subdued at 2 per cent per annum. The outstanding public debt to GDP ratio was 100 per cent at the start of the year and the nominal interest rate remains at 2 per cent (and this is the rate the government pays on all outstanding debt). The government"s fiscal balance net of interest payments goes into deficit during the year equivalent to 1 per cent of GDP and the public debt ratio rises by 4 per cent. In Year 2, the government stimulates the economy and pushes the primary fiscal deficit out to 4 per cent of GDP in recognition of the severity of the recession. In doing so it stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. The central bank holds the nominal interest rate constant but inflation falls to 1 per cent given the slack nature of the economy the previous year. Under these circumstances, the public debt ratio falls in Year 2, even though the fiscal deficit has risen because of the real growth in the economy.","ID":"1563","explanation":"","answers":[{"ID":"7921","answer":"False","correct":"1"},{"ID":"7920","answer":"True","correct":"0"}]}]}, {"ID":"386","name":"Quiz 2016 - 33","added_on":"2016-08-11 17:49:09","questions":[{"question":"1. As long as employment growth keeps pace with labour force growth, unemployment will not rise.","ID":"1564","explanation":"","answers":[{"ID":"7929","answer":"False","correct":"1"},{"ID":"7928","answer":"True","correct":"0"}]},{"question":"2. When a government issues debt to the non-government sector it creates more non-inflationary space for itself to spend than if it spent without issuing the debt.","ID":"1565","explanation":"","answers":[{"ID":"7931","answer":"False","correct":"1"},{"ID":"7930","answer":"True","correct":"0"}]},{"question":"3. If net exports are running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must be running a deficit equal to 1 per cent of GDP.","ID":"1566","explanation":"","answers":[{"ID":"7935","answer":"False","correct":"0"},{"ID":"7934","answer":"True ","correct":"1"}]}]}, {"ID":"387","name":"Quiz 2016 - 34","added_on":"2016-08-18 05:11:02","questions":[{"question":"1. Central banks provide reserves to the commercial banking system at some penalty rate. However, by standing ready to act as the lender of last resort to the commercial banks, the central bank"s capacity to control bank lending and target a given monetary policy rate is compromised.","ID":"1567","explanation":"","answers":[{"ID":"7949","answer":"False","correct":"0"},{"ID":"7948","answer":"True","correct":"1"}]},{"question":"2. If inflation is stable and maintained at a rate equal to the interest rate, then the government deficit as a proportion of GDP could double (say from 2 to 4 per cent) without pushing up the public debt ratio.","ID":"1568","explanation":"","answers":[{"ID":"7951","answer":"False","correct":"0"},{"ID":"7950","answer":"True","correct":"1"}]},{"question":"3. The wage share in national income in many nations has fallen over the neo-liberal period. However, a declining wage share does not mean the real standard of living for workers is falling.","ID":"1569","explanation":"","answers":[{"ID":"7947","answer":"False","correct":"0"},{"ID":"7946","answer":"True","correct":"1"}]}]}, {"ID":"388","name":"Quiz 2016 - 35","added_on":"2016-08-25 20:03:07","questions":[{"question":"1. Assume that a nation is running an on-going external deficit of 2 per cent of GDP. If the private domestic sector successfully spends less than its income, then we would always find a public sector deficit being recorded.","ID":"1570","explanation":"","answers":[{"ID":"7959","answer":"False","correct":"0"},{"ID":"7958","answer":"True ","correct":"1"}]},{"question":"2. The government has to issue debt if the central bank is targetting a non-zero policy rate and is reluctant to pay a return on excess bank reserves.","ID":"1571","explanation":"","answers":[{"ID":"7961","answer":"False","correct":"0"},{"ID":"7960","answer":"True","correct":"1"}]},{"question":"3. Assume that inflation and nominal interest rates are both constant and zero and a country has a public debt to GDP ratio of 100 per cent. The approach taken by those who support fiscal austerity is to run primary fiscal surpluses to stabilise and then reduce the debt ratio. Under the circumstances given, this strategy can still work even if the economy contracts under the burden of the surpluses.","ID":"1572","explanation":"","answers":[{"ID":"7963","answer":"False","correct":"0"},{"ID":"7962","answer":"True","correct":"1"}]}]}, {"ID":"389","name":"Quiz 2016 - 36","added_on":"2016-09-01 22:56:16","questions":[{"question":"1. Modern Monetary Theory (MMT) recognises the potential problem with running continuous fiscal deficits is that the spending builds up over time which adds to inflationary pressures.","ID":"1573","explanation":"","answers":[{"ID":"7971","answer":"False","correct":"1"},{"ID":"7970","answer":"True","correct":"0"}]},{"question":"2. In recent months, we have observed falling government bond yields in most nations which suggests that investors are viewing sovereign debt less favourably as the levels of outstanding debt rises.","ID":"1574","explanation":"","answers":[{"ID":"7977","answer":"False","correct":"1"},{"ID":"7976","answer":"True","correct":"0"}]},{"question":"3. If private domestic investment is less than private domestic saving, and the external sector is draining aggregate spending from the domestic economy, then the government fiscal balance has to be in deficit no matter what level of GDP is produced.","ID":"1575","explanation":"","answers":[{"ID":"7975","answer":"False","correct":"0"},{"ID":"7974","answer":"True","correct":"1"}]}]}, {"ID":"390","name":"Quiz 2016 - 37","added_on":"2016-09-08 18:36:43","questions":[{"question":"1. Start from a situation where the external surplus is the equivalent of 2 per cent of GDP and the government fiscal surplus surplus is 2 per cent. If the government fiscal balance stays constant as a per cent of GDP and the external surplus rises to the equivalent of 4 per cent of GDP, then you can conclude that national income also rises and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","ID":"1576","explanation":"","answers":[{"ID":"8001","answer":"False","correct":"0"},{"ID":"8000","answer":"True","correct":"1"}]},{"question":"2. If all bank loans had to be backed by reserves held at the bank then this would act as a brake on the capacity of the banks to lend and help maintain financial stability.","ID":"1577","explanation":"","answers":[{"ID":"7993","answer":"False","correct":"1"},{"ID":"7992","answer":"True","correct":"0"}]},{"question":"3. Raising taxation revenue is an essential element in a sovereign government"s plan to implement and provision its socio-economic agenda.","ID":"1578","explanation":"","answers":[{"ID":"7997","answer":"False","correct":"0"},{"ID":"7996","answer":"True","correct":"1"}]}]}, {"ID":"391","name":"Quiz 2016 - 38","added_on":"2016-09-08 18:38:06","questions":[{"question":"1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, until we know the relative magnitudes of these balances, we are unable to conclude the state of the fiscal balance.","ID":"1579","explanation":"","answers":[{"ID":"8003","answer":"False","correct":"1"},{"ID":"8002","answer":"True","correct":"0"}]},{"question":"2. A fiscal deficit means that the stock of government spending is larger than the tax revenue it receives.","ID":"1580","explanation":"","answers":[{"ID":"8009","answer":"False","correct":"1"},{"ID":"8008","answer":"True","correct":"0"}]},{"question":"3. The only obvious thing we can conclude when a government records a fiscal surplus is that the government is seeking to attenuate the growth in aggregate spending by withdrawing net spending from the economy.","ID":"1581","explanation":"","answers":[{"ID":"8005","answer":"False","correct":"1"},{"ID":"8004","answer":"True","correct":"0"}]}]}, {"ID":"392","name":"Quiz 2016 - 39","added_on":"2016-09-22 04:23:57","questions":[{"question":"1. A nation, whose national government runs a balanced fiscal position over the economic cycle (peak to peak) must accept, that after all the spending adjustments are exhausted, its private domestic sector will be increasingly indebted if the nation is running an external deficit over that cycle.","ID":"1582","explanation":"","answers":[{"ID":"8017","answer":"False","correct":"0"},{"ID":"8016","answer":"True","correct":"1"}]},{"question":"2. A nation that manages its currency via a currency board always has to have sufficient foreign reserves to match the outstanding central bank liabilities (reserves and cash outstanding). Under this arrangement it can always guarantee 100 per cent convertibility but has to endure deflationary tendencies unless it runs external surpluses.","ID":"1583","explanation":"","answers":[{"ID":"8023","answer":"False","correct":"0"},{"ID":"8022","answer":"True","correct":"1"}]},{"question":"3. Modern Monetary Theory (MMT) demonstrates that mass unemployment can arise from workers demanding too high a nominal wage in relation to the inflation rate.","ID":"1584","explanation":"","answers":[{"ID":"8019","answer":"False","correct":"0"},{"ID":"8018","answer":"True","correct":"1"}]}]}, {"ID":"393","name":"Quiz 2016 - 40","added_on":"2016-09-29 20:37:47","questions":[{"question":"1. When the IMF and the OECD talk about structural fiscal deficits, you know their estimates are:","ID":"1585","explanation":"","answers":[{"ID":"8035","answer":"biased downwards thus indicating that the government fiscal stance is less expansionary than it actually is.","correct":"0"},{"ID":"8036","answer":"biased upwards thus indicating that the government fiscal stance is more expansionary than it actually is.","correct":"1"},{"ID":"8037","answer":"difficult to assess because their forecasts are subject to forecasting inaccuracy.","correct":"0"}]},{"question":"2. When a sovereign government issues debt it logically:","ID":"1586","explanation":"","answers":[{"ID":"8032","answer":"increases the financial assets that are held by the non-government sector $-for-$.","correct":"0"},{"ID":"8033","answer":"has no impact on the overall holdings of financial assets held by the non-government sector $-for-$.","correct":"1"},{"ID":"8034","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"}]},{"question":"3. Historically, government debt has been used by central banks to manage liquidity and sustain positive short-term policy interest rates targets. This function necessitates that currency-issuing governments continue to, at least, issue enough debt to allow these open market operations to continue.","ID":"1587","explanation":"","answers":[{"ID":"8031","answer":"False","correct":"1"},{"ID":"8030","answer":"True","correct":"0"}]}]}, {"ID":"394","name":"Quiz 2016 - 41","added_on":"2016-10-06 16:40:17","questions":[{"question":"1. If calibrated correctly, quantitative easing (QE) programs run by central banks can replace the net financial assets held by the non-government sector, which are destroyed by fiscal austerity programs.","ID":"1588","explanation":"","answers":[{"ID":"8045","answer":"False","correct":"1"},{"ID":"8044","answer":"True","correct":"0"}]},{"question":"2. The expansionary impact of deficit spending on aggregate spending (demand) is lower when the government matches the deficit with debt-issuance because then excess reserves are drained and the purchasing power is taken out of the monetary system.","ID":"1589","explanation":"","answers":[{"ID":"8047","answer":"False","correct":"1"},{"ID":"8046","answer":"True","correct":"0"}]},{"question":"3. The government is attempting to stimulate the economy via a discretionary expansion of the fiscal deficit. The private market orientated advisors tell them to cut taxes and "privatise" the expansion whereas the more civic-minded advisors argue that there is a need for improved public infrastructure which requires increases in government spending. So imagine that the government is choosing between a tax cut that will reduce tax revenue at the current level of national income by $x and a spending increase of $x. Which policy option will have the greater initial impact on aggregate demand?","ID":"1590","explanation":"","answers":[{"ID":"8048","answer":"Tax cut","correct":"0"},{"ID":"8049","answer":"Spending increase","correct":"1"},{"ID":"8050","answer":"Both will be equivalent","correct":"0"},{"ID":"8051","answer":"There is not enough information to answer this question","correct":"0"}]}]}, {"ID":"395","name":"Quiz 2016 - 42","added_on":"2016-10-13 19:36:06","questions":[{"question":"1. If any nation adopts a "balanced budget" rule (that government spending plus interest payments must equal revenue at all times) and they successfully achieve that goal then the private domestic sector in nations that run external deficits will always spend less than they earn.","ID":"1591","explanation":"","answers":[{"ID":"8059","answer":"False","correct":"1"},{"ID":"8058","answer":"True","correct":"0"}]},{"question":"2. The non-government sector does not enjoy an increase in its financial asset holdings as a result of its sovereign government issuing debt to match its net spending.","ID":"1592","explanation":"","answers":[{"ID":"8061","answer":"False","correct":"0"},{"ID":"8060","answer":"True","correct":"1"}]},{"question":"3. In a situation where the private domestic sector decides to lift its overall saving rate we cannot conclude that the national government has to increase its net spending (deficit) to avoid employment losses.","ID":"1593","explanation":"","answers":[{"ID":"8063","answer":"False","correct":"0"},{"ID":"8062","answer":"True","correct":"1"}]}]}, {"ID":"396","name":"Quiz 2016 - 43","added_on":"2016-10-19 18:12:55","questions":[{"question":"1. A fiscal deficit equivalent to 3 per cent of GDP tells us that the government is adopting a less expansionary policy stance than if the fiscal deficit outcome was equivalent to 5 per cent of GDP.","ID":"1594","explanation":"","answers":[{"ID":"8079","answer":"False","correct":"0"},{"ID":"8078","answer":"True","correct":"0"},{"ID":"8080","answer":"Maybe","correct":"1"}]},{"question":"2. When the government borrows from the private sector to match an increase in net public spending (deficit), the resulting increase in aggregate spending is less than would be the case if there was no bond sale.","ID":"1595","explanation":"","answers":[{"ID":"8073","answer":"False","correct":"1"},{"ID":"8072","answer":"True","correct":"0"}]},{"question":"3. Consider the following table which describes four different economies in terms of the behavioural parameters relating to the leakages to aggregate demand. Assume that in all four economies, there is idle capacity, the central bank holds all interest rates constant, inflation is constant and there is no changes in international competitiveness.nn\\\"\\\"n
nnWhich economy would deliver the largest national income bonus for a given discretionary expansion in government spending.n","ID":"1596","explanation":"","answers":[{"ID":"8084","answer":"Economy D","correct":"0"},{"ID":"8083","answer":"Economy C","correct":"0"},{"ID":"8082","answer":"Economy B","correct":"0"},{"ID":"8081","answer":"Economy A","correct":"1"}]}]}, {"ID":"397","name":"Quiz 2016 - 44","added_on":"2016-10-28 03:05:36","questions":[{"question":"1. The extended period of quantitative easing in many nations has not seen inflation accelerate. This strongly refutes the mainstream theory of inflation embodied in the mainstream Quantity Theory of Money, which claims that growth in the stock of money will be inflationary.","ID":"1597","explanation":"","answers":[{"ID":"8098","answer":"False","correct":"1"},{"ID":"8097","answer":"True","correct":"0"}]},{"question":"2. At present, bank lending is capital- rather than reserve constrained. If the central bank forced banks to maintain a 100 per cent reserve ratio then lending would also become reserve constrained.","ID":"1598","explanation":"","answers":[{"ID":"8094","answer":"False","correct":"1"},{"ID":"8093","answer":"True","correct":"0"}]},{"question":"3. In the context of population ageing, a currency-issuing sovereign government can always provide first-class health care to its citizens even in the face of rising dependency ratios.","ID":"1599","explanation":"","answers":[{"ID":"8100","answer":"False","correct":"1"},{"ID":"8099","answer":"True","correct":"0"}]}]}, {"ID":"398","name":"Quiz 2016 - 45","added_on":"2016-11-03 19:21:30","questions":[{"question":"1. The price at which the central bank provides reserves to the commercial banks is restricted by its target monetary policy rate. ","ID":"1600","explanation":"","answers":[{"ID":"8117","answer":"False","correct":"0"},{"ID":"8116","answer":"True","correct":"1"}]},{"question":"2. A rising fiscal deficit is the signal that government policy is becoming more expansionary.","ID":"1601","explanation":"","answers":[{"ID":"8114","answer":"False","correct":"0"},{"ID":"8113","answer":"True","correct":"0"},{"ID":"8115","answer":"Maybe","correct":"1"}]},{"question":"3. When a nation"s currency appreciates strongly its international competitiveness falls. In these situations, the only way to restore that competitiveness is to reduce the rate of growth in domestic wages and prices relative to our trading partners.","ID":"1602","explanation":"","answers":[{"ID":"8112","answer":"False","correct":"1"},{"ID":"8111","answer":"True","correct":"0"}]}]}, {"ID":"399","name":"Quiz 2016 - 46","added_on":"2016-11-10 17:42:34","questions":[{"question":"1. A sovereign national government can run a balanced fiscal position over the economic cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will only be in surplus if the external balance is in surplus.","ID":"1603","explanation":"","answers":[{"ID":"8132","answer":"False","correct":"0"},{"ID":"8131","answer":"True","correct":"1"},{"ID":"8133","answer":"Maybe, if private sector indebtedness is low.","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) concurs that excessive real wages growth can cause unemployment.","ID":"1604","explanation":"","answers":[{"ID":"8127","answer":"False","correct":"0"},{"ID":"8126","answer":"True","correct":"1"}]},{"question":"3. Imagine that macroeconomic policy is geared towards keeping real GDP growth on trend. Assume this rate of growth is 3 per cent per annum. If labour productivity is growing at 2 per cent per annum and the labour force is growing at 1.5 per cent per annum and the average working week is constant in hours, then the policy-driven trend will lead to a falling unemployment rate.","ID":"1605","explanation":"","answers":[{"ID":"8129","answer":"False","correct":"1"},{"ID":"8128","answer":"True","correct":"0"},{"ID":"8130","answer":"Maybe, depending on what is happening with aggregate spending.","correct":"0"}]}]}, {"ID":"400","name":"Quiz 2016 - 47","added_on":"2016-11-16 16:30:03","questions":[{"question":"1. When a sovereign government issues debt it logically:","ID":"1606","explanation":"","answers":[{"ID":"8155","answer":"Increases the financial assets that are held by the non-government sector $-for-$.","correct":"0"},{"ID":"8156","answer":"Has no impact on the overall holdings of financial assets held by the non-government sector $-for-$.","correct":"1"},{"ID":"8157","answer":"Reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds","correct":"0"}]},{"question":"2. Only one of the following statements is definitely true when you observe rising government bond yields for new issues:","ID":"1607","explanation":"","answers":[{"ID":"8154","answer":"Government spending is increasing the cost of borrowing for private investors.","correct":"0"},{"ID":"8153","answer":"Bond prices are falling in response to falling demand.","correct":"1"},{"ID":"8152","answer":"Government spending is becoming more expensive.","correct":"0"}]},{"question":"3. Open market operations as a means of ensuring that levels of bank reserves are consistent with the policy interest rate target becomes redundant if the central bank pays a positive interest rate on overnight reserves held by the commercial banks (ignore any reserve requirements in place when answering).","ID":"1608","explanation":"","answers":[{"ID":"8147","answer":"False","correct":"0"},{"ID":"8146","answer":"True","correct":"0"},{"ID":"8148","answer":"Maybe","correct":"1"}]}]}, {"ID":"401","name":"Quiz 2016 - 48","added_on":"2016-11-16 16:32:09","questions":[{"question":"1. A rising fiscal deficit indicates an expansionary shift in government policy and the challenge is to ensure the nominal demand stimulus does not exceed the real capacity of the economy to respond by increasing real output.","ID":"1609","explanation":"","answers":[{"ID":"8159","answer":"False","correct":"1"},{"ID":"8158","answer":"True","correct":"0"}]},{"question":"1. The imposition of taxes by the national government creates unemployment, other things equal.","ID":"1610","explanation":"","answers":[{"ID":"8161","answer":"False","correct":"0"},{"ID":"8160","answer":"True","correct":"1"}]},{"question":"3. When economic growth resumes, the automatic stabilisers work in a counter-cyclical fashion and ensure that the government fiscal balance returns to its appropriate level.","ID":"1611","explanation":"","answers":[{"ID":"8163","answer":"False","correct":"1"},{"ID":"8162","answer":"True","correct":"0"}]}]}, {"ID":"402","name":"Quiz 2016 - 49","added_on":"2016-12-01 01:07:29","questions":[{"question":"1. Assume the central bank keeps the inflation rate steady and equal to the nominal interest rate. Under these monetary conditions it remains true that pushing the primary fiscal balance into surplus can drive down the public debt to GDP ratio even though the fiscal austerity causes a recession.","ID":"1612","explanation":"","answers":[{"ID":"8177","answer":"False","correct":"0"},{"ID":"8176","answer":"True","correct":"1"}]},{"question":"2. The government has to issue debt to match its fiscal deficit if the central bank is targetting, say a 3 per cent short-term interest rate and declines to pay a return on excess bank reserves.","ID":"1613","explanation":"","answers":[{"ID":"8179","answer":"False","correct":"0"},{"ID":"8178","answer":"True","correct":"1"}]},{"question":"3. A typical IMF export-led strategy is to propose cutting real wages in order (they say) to improve external competitiveness and pushing the government into fiscal surplus via austerity. The aim is for net exports growth to more than offset the loss of spending arising from fiscal austerity. Suppose that the government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.","ID":"1614","explanation":"","answers":[{"ID":"8181","answer":"False","correct":"0"},{"ID":"8180","answer":"True","correct":"1"}]}]}, {"ID":"403","name":"Quiz 2016 - 50","added_on":"2016-12-08 16:17:58","questions":[{"question":"1. A program of fiscal austerity (pushing towards surplus) will always undermine attempts by the private domestic sector to reduce its indebtedness when a nation external balance is in deficit.","ID":"1615","explanation":"","answers":[{"ID":"8189","answer":"False","correct":"0"},{"ID":"8188","answer":"True","correct":"1"}]},{"question":"2. A rising level of bank reserves will make it easier for banks to expand credit to the private sector if the demand for loans increases.","ID":"1616","explanation":"","answers":[{"ID":"8191","answer":"False","correct":"1"},{"ID":"8190","answer":"True","correct":"0"}]},{"question":"3. The public debt ratio is of no concern because economic growth will always bring it down after a recession.","ID":"1617","explanation":"","answers":[{"ID":"8193","answer":"False","correct":"1"},{"ID":"8192","answer":"True","correct":"0"}]}]}, {"ID":"404","name":"Quiz 2016 - 51","added_on":"2016-12-15 19:12:03","questions":[{"question":"1. During the American Civil War, the Confederate states experienced rising inflation as a result of their war spending in 1861. The Confederate Government could have eased the inflationary impact of this spending by issuing more bonds than it did.","ID":"1618","explanation":"","answers":[{"ID":"8205","answer":"False","correct":"1"},{"ID":"8204","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) does not reject the claim that government spending can crowd out private spending.","ID":"1619","explanation":"","answers":[{"ID":"8203","answer":"False","correct":"0"},{"ID":"8202","answer":"True","correct":"1"}]},{"question":"3. If there is an external (current account) deficit, then government deficits are required if private households are to save.","ID":"1620","explanation":"","answers":[{"ID":"8201","answer":"False","correct":"1"},{"ID":"8200","answer":"True","correct":"0"}]}]}, {"ID":"405","name":"Quiz 2016 - 52","added_on":"2016-12-22 18:16:37","questions":[{"question":"1. A national, currency-issuing government that runs a balanced fiscal outcome (spending equals revenue) over the economic cycle (peak to peak) also has to accept that, after all the spending adjustments are exhausted, their strategy will ensure that households and firms overall spend more than they earn - that is, run down previous savings or accumulate more net debt.","ID":"1621","explanation":"","answers":[{"ID":"8217","answer":"False","correct":"1"},{"ID":"8216","answer":"True","correct":"0"}]},{"question":"2. A basic understanding of Modern Monetary Theory (MMT) would argue that mass unemployment is due to a deficiency in aggregate spending which would then lead one to reject the conclusion that excessive real wage demands by workers can cause such unemployment. ","ID":"1622","explanation":"","answers":[{"ID":"8215","answer":"False","correct":"1"},{"ID":"8214","answer":"True","correct":"0"}]},{"question":"3. Modern Monetary Theory (MMT) teaches us that a sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues:nnnnn","ID":"1623","explanation":"","answers":[{"ID":"8218","answer":"The less is the volume of investment funds available to the non-government sector.","correct":"0"},{"ID":"8219","answer":"The greater is non-government wealth held in the form of public debt.","correct":"1"},{"ID":"8220","answer":"The more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"},{"ID":"8221","answer":"All of the above.","correct":"0"}]},{"question":"4. Which picture best describes Santa heading out on Xmas Day to hand out presents?nn
n
nOption A:nn\\\"\\\"n
nn
n
nnOption B:nn\\\"\\\"n
","ID":"1624","explanation":"","answers":[{"ID":"8230","answer":"A. Cold Santa","correct":"0"},{"ID":"8231","answer":"B. Hot Santa","correct":"1"}]}]}, {"ID":"406","name":"Quiz 2016 - 53","added_on":"2016-12-29 02:06:56","questions":[{"question":"1. A rising public debt ratio during a recession is of no concern because it falls once economic growth resumes.","ID":"1625","explanation":"","answers":[{"ID":"8239","answer":"False","correct":"1"},{"ID":"8238","answer":"True","correct":"0"}]},{"question":"2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP) - a nation can run a current account deficit:","ID":"1626","explanation":"","answers":[{"ID":"8252","answer":"Accompanied by a government sector surplus that is larger, while the private domestic sector spends less than it earns.","correct":"0"},{"ID":"8253","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"},{"ID":"8250","answer":"Accompanied by a government sector surplus of equal size, while the private domestic sector spends less than it earns.","correct":"0"},{"ID":"8251","answer":"Accompanied by a government sector surplus of equal size, while the private domestic sector spends more than it earns.","correct":"1"}]},{"question":"3. The expansionary impact of deficit spending on aggregate demand will be lower when the government matches its fiscal deficit with debt-issuance compared to a situation where it issues no debt.","ID":"1627","explanation":"","answers":[{"ID":"8245","answer":"False","correct":"1"},{"ID":"8244","answer":"True","correct":"0"}]}]}, {"ID":"407","name":"Quiz 2017 - 01","added_on":"2017-01-05 19:15:11","questions":[{"question":"1. Modern Monetary Theory (MMT) characterises the interaction between the government sector (treasury and central bank) and the non-government sector in terms of vertical transactions, which change the net financial asset position of the non-government sector. These are in contrast with transactions within the non-government sector, which net to zero in terms of the impact on that sector"s net financial asset position. Both quantitative easing (a central bank operation) and net public spending (a treasury operation) satisfy this definition of a vertical transaction.","ID":"1628","explanation":"","answers":[{"ID":"8261","answer":"False","correct":"1"},{"ID":"8260","answer":"True","correct":"0"}]},{"question":"2. The real wage can only grow if the rate of growth in earnings outstrips labour productivity growth.","ID":"1629","explanation":"","answers":[{"ID":"8265","answer":"False","correct":"1"},{"ID":"8264","answer":"True","correct":"0"}]},{"question":"3. A fiscal deficit equivalent to 3 per cent of GDP is more stimulatory than a deficit equivalent to 1 per cent of GDP< even if we do not know what the structural and cyclical break down of the aggregate figure is.","ID":"1630","explanation":"","answers":[{"ID":"8267","answer":"False","correct":"0"},{"ID":"8266","answer":"True","correct":"1"}]}]}, {"ID":"408","name":"Quiz 2017 - 02","added_on":"2017-01-12 17:07:41","questions":[{"question":"1. The money supply is often defined to be the sum of currency on issue and demand deposits held in banks. The value of money always declines if the money supply rises.","ID":"1631","explanation":"","answers":[{"ID":"8275","answer":"False","correct":"1"},{"ID":"8274","answer":"True","correct":"0"}]},{"question":"2. Economists note that the automatic stabilisers embedded in government fiscal policy increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the fiscal outcome to the economic cycle would not be eliminated if the government followed a fiscal rule such that it had to be in balance at all times.","ID":"1632","explanation":"","answers":[{"ID":"8281","answer":"False","correct":"0"},{"ID":"8280","answer":"True","correct":"1"}]},{"question":"3. If the nation is running a current account deficit, then domestic households and firms and the government cannot simultaneously spend less than their income.","ID":"1633","explanation":"","answers":[{"ID":"8279","answer":"False","correct":"0"},{"ID":"8278","answer":"True","correct":"1"}]}]}, {"ID":"409","name":"Quiz 2017 - 03","added_on":"2017-01-19 01:57:51","questions":[{"question":"1. A program of fiscal austerity which yields a fiscal surplus will always undermine attempts by the private domestic sector to save overall when the nation"s exports are less than the sum of their imports and net income flows.","ID":"1634","explanation":"","answers":[{"ID":"8289","answer":"False","correct":"0"},{"ID":"8288","answer":"True","correct":"1"}]},{"question":"2. The more funds that commercial banks have on account with the central bank the greater is their capacity to provide loans to customers. ","ID":"1635","explanation":"","answers":[{"ID":"8291","answer":"False","correct":"1"},{"ID":"8290","answer":"True","correct":"0"}]},{"question":"3. If governments sought funding from the central bank for their net spending (deficits) rather than private bond markets then the inflation risk of such spending would remain unchanged.","ID":"1636","explanation":"","answers":[{"ID":"8293","answer":"False","correct":"0"},{"ID":"8292","answer":"True","correct":"1"}]}]}, {"ID":"410","name":"Quiz 2017 - 04","added_on":"2017-01-26 03:08:34","questions":[{"question":"1. If the inflation rate is steady and the central bank maintains a constant nominal interest rate, then under current institutional arrangements where governments match deficit spending with debt issuance to the private sector, the public debt ratio may fall even if the government deficit doubles (say, from 2 to 4 per cent of GDP).","ID":"1637","explanation":"","answers":[{"ID":"8301","answer":"False","correct":"0"},{"ID":"8300","answer":"True","correct":"1"}]},{"question":"2. The neo-liberal era has been characterised by a declining wage share in national income in many nations. This means that the real living standards of workers have been systematically eroded in these nations.","ID":"1638","explanation":"","answers":[{"ID":"8303","answer":"False","correct":"1"},{"ID":"8302","answer":"True","correct":"0"}]},{"question":"3. Suppose that the government announced as part of a fiscal austerity strategy that it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year while net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. In that situation we would not be able to conclude that the fiscal austerity plans would undermine growth if the net export projection was realised.","ID":"1639","explanation":"","answers":[{"ID":"8307","answer":"False","correct":"0"},{"ID":"8306","answer":"True","correct":"1"}]}]}, {"ID":"411","name":"Quiz 2017 - 05","added_on":"2017-02-02 19:01:14","questions":[{"question":"1. A currency-issuing government always has the capacity to ensure there is first-class services to meet the demands of an ageing population.","ID":"1640","explanation":"","answers":[{"ID":"8315","answer":"False","correct":"1"},{"ID":"8314","answer":"True","correct":"0"}]},{"question":"2. Introducing a system of 100 per cent reserve requirements on the commercial banks would give the central bank control of the money supply.","ID":"1641","explanation":"","answers":[{"ID":"8319","answer":"False","correct":"1"},{"ID":"8318","answer":"True","correct":"0"}]},{"question":"3. When a nation is running a small current account deficit (close to balance), the government"s fiscal balance will always be in deficit when the domestic private sector is spending less than it earns.","ID":"1642","explanation":"","answers":[{"ID":"8317","answer":"False","correct":"0"},{"ID":"8316","answer":"True","correct":"1"}]}]}, {"ID":"412","name":"Quiz 2017 - 06","added_on":"2017-02-09 18:58:29","questions":[{"question":"1. National accounting rules dictate that a national government surplus equals a non-government deficit (and vice-versa). If a national government successfully achieves a fiscal surplus through an austerity program then the private domestic sector must be spending more than it is earning.","ID":"1643","explanation":"","answers":[{"ID":"8320","answer":"True","correct":"0"},{"ID":"8321","answer":"False","correct":"1"}]},{"question":"2. The relentless push by neo-liberals to suppress real wages growth has ensured the share of national income going to profits has expanded over the last 30 years in many nations.","ID":"1644","explanation":"","answers":[{"ID":"8322","answer":"True","correct":"0"},{"ID":"8323","answer":"False","correct":"1"}]},{"question":"3. It might be argued that the strength of the German trade sector has kept the value of the euro at elevated levels against many of the key currencies and this has significantly reduced the international competitiveness of its higher per unit cost Eurozone partners. However, export competitiveness in those other Eurozone nations, such as Greece, would be increased if local workers accept cuts in nominal wages and their inflation rates are contained.","ID":"1645","explanation":"","answers":[{"ID":"8324","answer":"True","correct":"0"},{"ID":"8325","answer":"False","correct":"1"}]}]}, {"ID":"413","name":"Quiz 2017 - 07","added_on":"2017-02-16 17:46:48","questions":[{"question":"1. Central banks provide reserves to the commercial banking system usually at some penalty rate. However, this compromises their capacity to target a given monetary policy rate.","ID":"1646","explanation":"","answers":[{"ID":"8341","answer":"False","correct":"0"},{"ID":"8340","answer":"True ","correct":"1"}]},{"question":"2. If inflation is stable and the central bank holds the nominal interest rate constant, then a currency-isuing government, which matches its net spending $-for-$ with debt issuance, could double its fiscal deficit without pushing up the public debt ratio.","ID":"1647","explanation":"","answers":[{"ID":"8343","answer":"False","correct":"0"},{"ID":"8342","answer":"True","correct":"1"}]},{"question":"3. If Greece could achieve positive net exports (the strategy of the Troika), then it could could push for a primary fiscal surplus knowing it will not compromise growth.","ID":"1648","explanation":"","answers":[{"ID":"8339","answer":"False","correct":"1"},{"ID":"8338","answer":"True","correct":"0"}]}]}, {"ID":"414","name":"Quiz 2017 - 08","added_on":"2017-02-23 16:49:25","questions":[{"question":"1. The private domestic sector cannot save if a nation"s external sector is in balance (and thus making no contribution to real GDP growth) and the government runs a balanced fiscal position.","ID":"1649","explanation":"","answers":[{"ID":"8377","answer":"False","correct":"1"},{"ID":"8376","answer":"True","correct":"0"}]},{"question":"2. Continually expanding the money supply will inevitably be inflationary.","ID":"1650","explanation":"","answers":[{"ID":"8371","answer":"False","correct":"1"},{"ID":"8370","answer":"True","correct":"0"}]},{"question":"3. By voluntarily issuing debt to match its net spending, government borrowing from the private domestic sector reduces, but does not eliminate, the risk that public deficits will be inflationary.","ID":"1651","explanation":"","answers":[{"ID":"8369","answer":"False","correct":"1"},{"ID":"8368","answer":"True","correct":"0"}]}]}, {"ID":"415","name":"Quiz 2017 - 09","added_on":"2017-02-23 16:50:49","questions":[{"question":"1. When a nation is generating large external surpluses, it can create more space for non-inflationary spending in the future if the government runs fiscal surpluses and accumulates them in a sovereign fund.","ID":"1652","explanation":"","answers":[{"ID":"8379","answer":"False","correct":"1"},{"ID":"8378","answer":"True","correct":"0"}]},{"question":"2. Whenever organisations such as the OECD or the IMF publish their latest analysis of the fiscal situation of a particular nation, you can typically conclude that the stated discretionary fiscal position for the government in question is more expansionary than it actually is.","ID":"1653","explanation":"","answers":[{"ID":"8381","answer":"False","correct":"0"},{"ID":"8380","answer":"True","correct":"1"}]},{"question":"3. Under current institutional arrangements (where deficits are matched $-for-$ by debt-issuance), the change in the ratio of public debt to GDP will exactly equal the primary deficit plus the interest service payments on the outstanding stock of debt both expressed as ratios to GDP minus the changes in the monetary base arising from official foreign exchange transactions.","ID":"1654","explanation":"","answers":[{"ID":"8385","answer":"False","correct":"1"},{"ID":"8384","answer":"True","correct":"0"}]}]}, {"ID":"416","name":"Quiz 2017 - 10","added_on":"2017-02-23 16:52:06","questions":[{"question":"1. If the national accounts of a nation reveal that its external surplus is equivalent to 2 per cent of GDP and the private domestic sector is saving overall 3 per cent of GDP, then we know that national income adjustments would ensure that the fiscal balance was in:","ID":"1655","explanation":"","answers":[{"ID":"8388","answer":"Deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"8389","answer":"Surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"8390","answer":"Deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"8391","answer":"Surplus equal to 5 per cent of GDP.","correct":"0"},{"ID":"8392","answer":"None of the above.","correct":"0"}]},{"question":"2. Even though a government that issues its own fiat currency is not revenue constrained, it is still correct to say that recipients of income support provided by such a national government live off the hard work of those who pay income taxes.","ID":"1656","explanation":"","answers":[{"ID":"8398","answer":"False","correct":"0"},{"ID":"8397","answer":"True","correct":"1"}]},{"question":"3. There is no difference in terms of the government"s impact on aggregate demand, between the government matching its deficit spending with bond issues to the non-government sector and the situation where the government instructed the central bank to buy its bonds to match the deficit.","ID":"1657","explanation":"","answers":[{"ID":"8396","answer":"False","correct":"0"},{"ID":"8395","answer":"True","correct":"1"}]}]}, {"ID":"417","name":"Quiz 2017 - 11","added_on":"2017-02-23 16:53:12","questions":[{"question":"1. The automatic stabilisers built into national government fiscal policy operate in a counter-cyclical manner.","ID":"1658","explanation":"","answers":[{"ID":"8400","answer":"False","correct":"0"},{"ID":"8399","answer":"True","correct":"1"}]},{"question":"2. To ensure that the financial system is stable, the central bank has to allow the money supply to be driven by the monetary base.","ID":"1659","explanation":"","answers":[{"ID":"8406","answer":"False","correct":"1"},{"ID":"8405","answer":"True","correct":"0"}]},{"question":"3. The spending by a sovereign government becomes more expensive when the bond markets push yields on new bond issues up.","ID":"1660","explanation":"","answers":[{"ID":"8404","answer":"False","correct":"1"},{"ID":"8403","answer":"True","correct":"0"}]}]}, {"ID":"418","name":"Quiz 2017 - 12","added_on":"2017-03-23 03:14:49","questions":[{"question":"1. Imagine that macroeconomic policy is geared towards keeping real GDP growth on trend. Assume this rate of growth is 3 per cent per annum. If labour productivity is growing at 2 per cent per annum and the labour force is growing at 1.5 per cent per annum and the average working week is constant in hours, then this policy regime will result in:","ID":"1661","explanation":"","answers":[{"ID":"8415","answer":"(a) A declining unemployment rate.","correct":"0"},{"ID":"8416","answer":"(b) An unchanged unemployment rate.","correct":"0"},{"ID":"8417","answer":"(c) A rising unemployment rate.","correct":"1"}]},{"question":"2. Students are taught that the macroeconomic income determination system can be thought of as a bath tub with the current GDP being the water level. The drain plug can be thought of as saving, imports and taxation payments (the so-called leakages from the expenditure system) while the taps can be thought of as investment, government spending and exports (the so-called exogenous injections into the spending system). This analogy is valid because GDP will be unchanged as long as the flows into the bath are equal to the flows out of it which is tantamount to saying the the spending gap left by the leakages is always filled by the injections.","ID":"1662","explanation":"","answers":[{"ID":"8414","answer":"False","correct":"1"},{"ID":"8413","answer":"True","correct":"0"}]},{"question":"3. In 1998, Russia defaulted on its outstanding domestic debt because it temporarily ran out of rubles due to the currency peg it was running with the US dollar.","ID":"1663","explanation":"","answers":[{"ID":"8421","answer":"False","correct":"1"},{"ID":"8420","answer":"True","correct":"0"}]}]}, {"ID":"419","name":"Quiz 2017 - 13","added_on":"2017-03-30 20:17:41","questions":[{"question":"1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, until we know the relative magnitudes of these balances, we are unable to conclude the state of the fiscal balance.","ID":"1664","explanation":"","answers":[{"ID":"8429","answer":"False","correct":"1"},{"ID":"8428","answer":"True","correct":"0"}]},{"question":"2. The net financial asset position of the non-government sector is invariant to the decision by government to issue bonds to private dealers to match its deficit spending as against using Overt Monetary Financing.","ID":"1665","explanation":"","answers":[{"ID":"8435","answer":"False","correct":"0"},{"ID":"8434","answer":"True","correct":"1"}]},{"question":"3. When we observe a government recording a fiscal surplus which means it is withdrawing more purchasing power from the economy than it is adding, we know that it is seeking to attenuate the growth in aggregate demand.","ID":"1666","explanation":"","answers":[{"ID":"8433","answer":"False","correct":"1"},{"ID":"8432","answer":"True","correct":"0"}]}]}, {"ID":"420","name":"Quiz 2017 - 14","added_on":"2017-04-06 04:37:40","questions":[{"question":"1. The private domestic sector cannot save if a nation"s external sector is in balance (and thus making no contribution to real GDP growth) and the government runs a balanced fiscal position.","ID":"1667","explanation":"","answers":[{"ID":"8449","answer":"False","correct":"1"},{"ID":"8448","answer":"True","correct":"0"}]},{"question":"2. If the household saving ratio rises and there is an external deficit then government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"1668","explanation":"","answers":[{"ID":"8445","answer":"False","correct":"1"},{"ID":"8444","answer":"True","correct":"0"}]},{"question":"3. Rising yields on 10-year bond yields rising signify that the bond markets are demanding increased risk premiums for these assets. ","ID":"1669","explanation":"","answers":[{"ID":"8447","answer":"False","correct":"1"},{"ID":"8446","answer":"True","correct":"0"}]}]}, {"ID":"421","name":"Quiz 2017 - 15","added_on":"2017-04-13 20:50:42","questions":[{"question":"1. The payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend increase the overall level of reserves held by the latter (ignore any reserve requirements in place when answering).","ID":"1670","explanation":"","answers":[{"ID":"8463","answer":"False","correct":"0"},{"ID":"8462","answer":"True","correct":"1"}]},{"question":"2. The payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend to increase the volume of broad money in the system (ignore any reserve requirements in place when answering).","ID":"1671","explanation":"","answers":[{"ID":"8465","answer":"False","correct":"1"},{"ID":"8464","answer":"True","correct":"0"}]},{"question":"3. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.","ID":"1672","explanation":"","answers":[{"ID":"8467","answer":"False","correct":"1"},{"ID":"8466","answer":"True","correct":"0"}]}]}, {"ID":"422","name":"Quiz 2017 - 16","added_on":"2017-04-20 21:06:03","questions":[{"question":"1. Assume that the national accounts of a nation reveal that its external surplus is equivalent to 2 per cent of GDP and the private domestic sector is saving overall 3 per cent of GDP. We would also observe:","ID":"1673","explanation":"","answers":[{"ID":"8474","answer":"A fiscal deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"8475","answer":"A fiscal surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"8476","answer":"A fiscal deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"8477","answer":"A fiscal surplus equal to 5 per cent of GDP.","correct":"0"}]},{"question":"2. The fact that the Portuguese government"s fiscal balance has fallen from 4.2 per cent in 2015 to 2.1 per cent in 2016 allows us to conclude that it was seeking to decrease the size of government in the overall economic output.","ID":"1674","explanation":"","answers":[{"ID":"8479","answer":"False","correct":"1"},{"ID":"8478","answer":"True","correct":"0"}]},{"question":"3. In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 2 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 2 per cent (and this is the rate the government pays on all outstanding debt). The government"s fiscal balance net of interest payments goes into deficit equivalent to 1 per cent of GDP and the debt ratio rises by 4 per cent. In Year 2, the government stimulates the economy and pushes the primary fiscal deficit out to 4 per cent of GDP in recognition of the severity of the recession. In doing so it stimulates aggregate demand and the economy records a 4 per cent nominal GDP growth rate. The central bank holds the nominal interest rate constant but inflation falls to 1 per cent given the slack nature of the economy the previous year. Under these circumstances, the public debt ratio falls even though the fiscal deficit has risen because of the real growth in the economy.","ID":"1675","explanation":"","answers":[{"ID":"8483","answer":"False","correct":"1"},{"ID":"8482","answer":"True","correct":"0"}]}]}, {"ID":"423","name":"Quiz 2017 - 17","added_on":"2017-04-27 18:15:03","questions":[{"question":"1. In the absence of exchange rate flexibility, the Eurozone member states have to use painful internal devaluation designed to deflate nominal wages and prices in order to facilitate increased external competitiveness. If wages and prices fall at the same rate, then, for the logic to follow, labour productivity has to rise and employment has to fall.","ID":"1676","explanation":"","answers":[{"ID":"8495","answer":"False","correct":"1"},{"ID":"8494","answer":"True","correct":"0"}]},{"question":"2. To ensure that the financial system is stable, the central bank has to allow movements in the money supply to be driven by the movements in the monetary base.","ID":"1677","explanation":"","answers":[{"ID":"8493","answer":"False","correct":"1"},{"ID":"8492","answer":"True ","correct":"0"}]},{"question":"3. The cost of spending by a sovereign government increases when the bond markets push yields on new government bond issues up.","ID":"1678","explanation":"","answers":[{"ID":"8491","answer":"False","correct":"1"},{"ID":"8490","answer":"True ","correct":"0"}]}]}, {"ID":"424","name":"Quiz 2017 - 18","added_on":"2017-05-04 17:32:57","questions":[{"question":"1. The share of wages in national income in many nations has fallen significantly over the neo-liberal period which signals that the real standard of living for workers has been falling in those countries.","ID":"1679","explanation":"","answers":[{"ID":"8503","answer":"False","correct":"1"},{"ID":"8502","answer":"True","correct":"0"}]},{"question":"2. The Troika"s strategy for Greece is that domestic deflation will spark an export boom and provide the capacity for the government to run primary surpluses without compromising real economic growth. Assuming Greece actually sustained positive net exports then the government could maintain a primary fiscal surplus knowing it will not compromise growth.","ID":"1680","explanation":"","answers":[{"ID":"8505","answer":"False","correct":"1"},{"ID":"8504","answer":"True","correct":"0"}]},{"question":"3. Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current interest rate target. If on average the government collects an income tax of 20 cents in the dollar, then total tax revenue will rise by 0.20 times $X if government spending increases (once and for all) by $X dollars and private investment and exports remain unchanged.","ID":"1681","explanation":"","answers":[{"ID":"8507","answer":"False","correct":"1"},{"ID":"8506","answer":"True","correct":"0"}]}]}, {"ID":"425","name":"Quiz 2017 - 19","added_on":"2017-05-11 18:29:06","questions":[{"question":"1. Quantitative easing aims to stimulate aggregate spending by reducing long-term investment rates whereas deficit spending aims to stimulate aggregate spending via tax cuts or direct public spending. Both policies ultimately work by increasing the net financial assets held by the non-government sector.","ID":"1682","explanation":"","answers":[{"ID":"8515","answer":"False","correct":"1"},{"ID":"8514","answer":"True","correct":"0"}]},{"question":"2. In this week"s 2017-18 Fiscal Statement, the Australian government indicated that it aimed to achieve a fiscal surplus of 0.4 per cent of GDP by 2020-21 and trim the deficit every financial year in between. If the actual fiscal outcome remains in deficit by 2020-21, the Australian government will be rightly considered not to have gone hard enough on its fiscal austerity plans.","ID":"1683","explanation":"","answers":[{"ID":"8517","answer":"False","correct":"1"},{"ID":"8516","answer":"True","correct":"0"}]},{"question":"3. Modern Monetary Theory (MMT) brings an understanding of the way central banks purchase and sell government bonds to manage liquidity in the overnight cash markets and thus sustain their target rate of interest. MMT also leads to the conclusion that a central bank could still increase interest rates even if the US government instructed it to directly purchase treasury debt to match the national governments fiscal deficit.","ID":"1684","explanation":"","answers":[{"ID":"8519","answer":"False","correct":"0"},{"ID":"8518","answer":"True","correct":"1"}]}]}, {"ID":"426","name":"Quiz 2017 - 20","added_on":"2017-05-18 18:32:41","questions":[{"question":"1. The Australian Treasury like many official agencies 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 will typically be:","ID":"1685","explanation":"","answers":[{"ID":"8543","answer":"Difficult to assess because the Treasury forward estimates are subject to forecasting inaccuracy.","correct":"0"},{"ID":"8541","answer":"Biased downwards","correct":"0"},{"ID":"8542","answer":"Biased upwards","correct":"1"}]},{"question":"2. Under a fiat monetary system, the absence of currency convertibility means that:","ID":"1686","explanation":"","answers":[{"ID":"8540","answer":"the currency is only convertible into government bonds rather than gold","correct":"0"},{"ID":"8539","answer":"government can motivate people to exchange labour for public spending by fining anyone who walks down the street.","correct":"1"},{"ID":"8538","answer":"there is no reason for people to hold currency as a hedge against gold price falls.","correct":"0"}]},{"question":"3. The act of issuing debt by a sovereign government logically:","ID":"1687","explanation":"","answers":[{"ID":"8537","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"},{"ID":"8536","answer":"has no immediate impact on the overall holdings of assets held by the non-government sector $-for-$","correct":"1"},{"ID":"8535","answer":"increases the assets that are held by the non-government sector $-for-$.","correct":"0"}]}]}, {"ID":"427","name":"Quiz 2017 - 21","added_on":"2017-05-25 03:54:49","questions":[{"question":"1. If a nation"s external sector is in balance (and thus making no contribution to real GDP growth) then the private domestic sector cannot save if the government runs a balanced fiscal outcome.","ID":"1688","explanation":"","answers":[{"ID":"8551","answer":"False","correct":"1"},{"ID":"8550","answer":"True","correct":"0"}]},{"question":"2. A tax increase, which aims to increase tax revenue at the current level of national income by $x, will have a smaller initial negative impact on aggregate demand than a government spending cut of $x?","ID":"1689","explanation":"","answers":[{"ID":"8559","answer":"False","correct":"0"},{"ID":"8558","answer":"True","correct":"1"}]},{"question":"3. If the external sector is accumulating financial claims on the local economy and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can run surpluses without damaging employment growth.","ID":"1690","explanation":"","answers":[{"ID":"8557","answer":"False","correct":"1"},{"ID":"8556","answer":"True","correct":"0"}]}]}, {"ID":"428","name":"Quiz 2017 - 22","added_on":"2017-06-01 17:35:11","questions":[{"question":"1. When an economy is running a current account deficit, national income movements will ensure that only one of the two remaining sectors (government and private domestic) end up spending less than they receive, irrespective of the GDP growth rate.","ID":"1691","explanation":"","answers":[{"ID":"8567","answer":"False","correct":"0"},{"ID":"8566","answer":"True","correct":"1"}]},{"question":"2. Unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government debt, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"1692","explanation":"","answers":[{"ID":"8569","answer":"False","correct":"1"},{"ID":"8568","answer":"True","correct":"0"}]},{"question":"3. Standing facilities (credit lines etc) that central banks maintain means that the monetary base always adjusts to the changes in the money supply.","ID":"1693","explanation":"","answers":[{"ID":"8571","answer":"False","correct":"0"},{"ID":"8570","answer":"True","correct":"1"}]}]}, {"ID":"429","name":"Quiz 2017 - 23","added_on":"2017-06-08 17:48:40","questions":[{"question":"1. Modern Monetary Theory (MMT) teaches us that one of the dangers of public spending is that it can crowd out private spending.","ID":"1694","explanation":"","answers":[{"ID":"8581","answer":"False","correct":"0"},{"ID":"8580","answer":"True","correct":"1"}]},{"question":"2. National accounting shows us that a government surplus equals a non-government deficit. But that doesn"t mean that if fiscal austerity ends up generating a fiscal surpluses that households and firms will be running deficits.","ID":"1695","explanation":"","answers":[{"ID":"8583","answer":"False","correct":"0"},{"ID":"8582","answer":"True","correct":"1"}]},{"question":"3. Real wage cuts under austerity programs could increase the wage share.","ID":"1696","explanation":"","answers":[{"ID":"8579","answer":"False","correct":"0"},{"ID":"8578","answer":"True","correct":"1"}]}]}, {"ID":"430","name":"Quiz 2017 - 24","added_on":"2017-06-15 04:49:27","questions":[{"question":"1. National income would rise each year even if the workers were engaged by government to dig large holes and fill them in again on a daily basis.","ID":"1697","explanation":"","answers":[{"ID":"8591","answer":"False","correct":"0"},{"ID":"8590","answer":"True","correct":"1"}]},{"question":"2. Which fiscal position outcome is the least expansionary?","ID":"1698","explanation":"","answers":[{"ID":"8592","answer":"(a) A deficit of 1 per cent of GDP","correct":"1"},{"ID":"8593","answer":"(b) A deficit of 2 per cent of GDP","correct":"0"},{"ID":"8594","answer":"(c) A deficit of 3 per cent of GDP","correct":"0"},{"ID":"8595","answer":"(d) Cannot say because it depends on the decomposition of the structural and cyclical components.","correct":"0"}]},{"question":"3. If the government reduces its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"1699","explanation":"","answers":[{"ID":"8597","answer":"False","correct":"1"},{"ID":"8596","answer":"True","correct":"0"}]}]}, {"ID":"431","name":"Quiz 2017 - 25","added_on":"2017-06-22 18:14:23","questions":[{"question":"1. Issuing government debt reduces the risk of inflation arising from deficit spending because the private sector has less money to spend.","ID":"1700","explanation":"","answers":[{"ID":"8607","answer":"False","correct":"1"},{"ID":"8606","answer":"True","correct":"0"}]},{"question":"2. If net exports are running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must be running a surplus equal to 1 per cent of GDP.","ID":"1701","explanation":"","answers":[{"ID":"8613","answer":"False","correct":"1"},{"ID":"8612","answer":"True","correct":"0"}]},{"question":"3. To reduce the public debt ratio, the government has to eventually run primary fiscal surpluses.","ID":"1702","explanation":"","answers":[{"ID":"8611","answer":"False","correct":"1"},{"ID":"8610","answer":"True","correct":"0"}]}]}, {"ID":"432","name":"Quiz 2017 - 26","added_on":"2017-06-29 18:52:09","questions":[{"question":"1. National accounting shows us that a government surplus equals a non-government deficit. If fiscal austerity does generate fiscal surpluses it does so by swapping public for private debt.","ID":"1703","explanation":"","answers":[{"ID":"8627","answer":"False","correct":"1"},{"ID":"8626","answer":"True","correct":"0"}]},{"question":"2. In a stock-flow consistent macroeconomics, the sectoral balance stocks all sum to zero.","ID":"1704","explanation":"","answers":[{"ID":"8623","answer":"False","correct":"1"},{"ID":"8622","answer":"True","correct":"0"}]},{"question":"3. The payment of a positive interest return by the central bank on overnight bank reserves eliminates the need for it to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements). ","ID":"1705","explanation":"","answers":[{"ID":"8631","answer":"False","correct":"1"},{"ID":"8630","answer":"True","correct":"0"}]}]}, {"ID":"433","name":"Quiz 2017 - 27","added_on":"2017-07-06 20:06:11","questions":[{"question":"1. In terms of the initial impact on national income, a tax increase which aims to increase tax revenue at the current level of national income by $x is less damaging than a spending cut of $x?","ID":"1706","explanation":"","answers":[{"ID":"8639","answer":"False","correct":"0"},{"ID":"8638","answer":"True","correct":"1"}]},{"question":"2. If private households increase their saving from disposable income and firms reduce their investment expenditure, then the government has to expand its fiscal deficit to avoid employment losses.","ID":"1707","explanation":"","answers":[{"ID":"8641","answer":"False","correct":"1"},{"ID":"8640","answer":"True","correct":"0"}]},{"question":"3. During a recession, a government has to use expansionary fiscal policy to restore trend real GDP growth if it wants to reduce unemployment. ","ID":"1708","explanation":"","answers":[{"ID":"8643","answer":"False","correct":"1"},{"ID":"8642","answer":"True","correct":"0"}]}]}, {"ID":"434","name":"Quiz 2017 - 28","added_on":"2017-07-12 06:15:58","questions":[{"question":"1. The non-government sector is immediately wealthier if the government issues bonds to match its net spending (relative to not issuing them at all).","ID":"1709","explanation":"","answers":[{"ID":"8651","answer":"False","correct":"1"},{"ID":"8650","answer":"True","correct":"0"}]},{"question":"2. When a country runs a small current account deficit and the private domestic sector is saving overall, the government cannot run a surplus.","ID":"1710","explanation":"","answers":[{"ID":"8653","answer":"False","correct":"0"},{"ID":"8652","answer":"True","correct":"1"}]},{"question":"3. Ignoring any reserve requirements, a central bank will eliminate any need to conduct open market operations to sustain its target policy rate merelyby paying a positive return on excess overnight reserves. ","ID":"1711","explanation":"","answers":[{"ID":"8655","answer":"False","correct":"1"},{"ID":"8654","answer":"True","correct":"0"}]}]}, {"ID":"435","name":"Quiz 2017 - 29","added_on":"2017-07-19 22:33:14","questions":[{"question":"1. Irrespective of what the government does, the private domestic sector can still save overall, as long as the external sector delivers a surplus.","ID":"1712","explanation":"","answers":[{"ID":"8663","answer":"False","correct":"1"},{"ID":"8662","answer":"True","correct":"0"}]},{"question":"2. Central bank interest payments to the private banks on reserves reduces the private banks" incentive to advance credit to the private sector.","ID":"1713","explanation":"","answers":[{"ID":"8665","answer":"False","correct":"1"},{"ID":"8664","answer":"True","correct":"0"}]},{"question":"3. Rising government deficits indicate that its fiscal stance is becoming more expansionary.","ID":"1714","explanation":"","answers":[{"ID":"8667","answer":"False","correct":"1"},{"ID":"8666","answer":"True","correct":"0"}]}]}, {"ID":"436","name":"Quiz 2017 - 30","added_on":"2017-07-26 06:33:36","questions":[{"question":"1. The automatic stabilisers, that are built into fiscal policy settings, operate in a counter-cyclical fashion and ensure that the government fiscal balance, which rises during a recession, returns to its appropriate level once growth resumes.","ID":"1715","explanation":"","answers":[{"ID":"8675","answer":"False","correct":"1"},{"ID":"8674","answer":"True","correct":"0"}]},{"question":"2. A potential problem with running continuous fiscal deficits is that the spending builds up over time which adds to inflationary pressures.","ID":"1716","explanation":"","answers":[{"ID":"8677","answer":"False","correct":"1"},{"ID":"8676","answer":"True","correct":"0"}]},{"question":"3. If private domestic investment is less than private domestic saving and the external sector is draining aggregate spending from the economy then the government fiscal balance has to be in deficit no matter what level of GDP is produced.","ID":"1717","explanation":"","answers":[{"ID":"8679","answer":"False","correct":"0"},{"ID":"8678","answer":"True","correct":"1"}]}]}, {"ID":"437","name":"Quiz 2017 - 31","added_on":"2017-08-03 18:35:56","questions":[{"question":"1. Which scenario represents a more expansionary outcome:","ID":"1718","explanation":"","answers":[{"ID":"8688","answer":"A fiscal deficit of 5 per cent of GDP with an automatic stabiliser component equal to 3 per cent of GDP.","correct":"1"},{"ID":"8689","answer":"A fiscal deficit of 3 per cent of GDP","correct":"0"},{"ID":"8690","answer":"You cannot tell because you do not know the decomposition between the cyclical and structural components in Option (B)","correct":"0"}]},{"question":"2. When the government matches an increase in deficit spending with debt issued to the private sector, the growth in aggregate demand is less than would be the case if the government didn"t borrow.","ID":"1719","explanation":"","answers":[{"ID":"8692","answer":"False","correct":"1"},{"ID":"8691","answer":"True","correct":"0"}]},{"question":"3. In the context of population ageing, the fact that a sovereign government is never financially constrained means that it can always provide first-class health care to its citizens should it desire to do so.","ID":"1720","explanation":"","answers":[{"ID":"8687","answer":"False","correct":"1"},{"ID":"8686","answer":"True","correct":"0"}]}]}, {"ID":"438","name":"Quiz 2017 - 32","added_on":"2017-08-10 20:27:26","questions":[{"question":"1. A central bank sets the short-run interest rate and can choose to pay any rate on excess reserves to the commercial banks that it chooses.","ID":"1721","explanation":"","answers":[{"ID":"8700","answer":"False","correct":"1"},{"ID":"8699","answer":"True","correct":"0"}]},{"question":"2. The Australian dollar has appreciated recently against many key currencies. This has squeezed some of export industries (such as manufacturing) which are not enjoying a commensurate growth in world demand for their products. A cut in real wages is needed to restore international competitiveness in the industries that are under pressure.","ID":"1722","explanation":"","answers":[{"ID":"8702","answer":"False","correct":"1"},{"ID":"8701","answer":"True","correct":"0"}]},{"question":"3. If the nation is running a current account deficit of 2 per cent of GDP and the government runs a surplus equal to 2 per cent of GDP, then we know that at the current level of GDP, the private domestic sector is spending less than it is earning.","ID":"1723","explanation":"","answers":[{"ID":"8704","answer":"False","correct":"1"},{"ID":"8703","answer":"True","correct":"0"}]}]}, {"ID":"439","name":"Quiz 2017 - 33","added_on":"2017-08-17 22:56:20","questions":[{"question":"1. A sovereign national government requires taxation revenue in order to spend","ID":"1724","explanation":"","answers":[{"ID":"8712","answer":"False","correct":"0"},{"ID":"8711","answer":"True","correct":"1"}]},{"question":"2. The posting of a fiscal surplus indicates that the national government has sought to reduce aggregate spending in the economy.","ID":"1725","explanation":"","answers":[{"ID":"8720","answer":"False","correct":"1"},{"ID":"8719","answer":"True","correct":"0"}]},{"question":"3. To redistribute national income back to workers from capital, wages have to grow faster than the inflation rate.","ID":"1726","explanation":"","answers":[{"ID":"8718","answer":"False","correct":"1"},{"ID":"8717","answer":"True","correct":"0"}]}]}, {"ID":"440","name":"Quiz 2017 - 34","added_on":"2017-08-24 08:04:28","questions":[{"question":"1. If the external sector overall is in deficit, it is still possible for the private domestic sector and government sector to run surpluses as long as GDP growth is fast enough (the technical condition is that the rate of GDP growth has to be faster than the real interest rate).","ID":"1727","explanation":"","answers":[{"ID":"8728","answer":"False","correct":"1"},{"ID":"8727","answer":"True","correct":"0"}]},{"question":"2. Federal government debt (where there is currency sovereignty) is not really a liability because the government can just roll it over continuously and thus they never have to pay it back. This is different to a household, which not only has to service its debts but also has to repay them at the due date.","ID":"1728","explanation":"","answers":[{"ID":"8732","answer":"False","correct":"1"},{"ID":"8731","answer":"True","correct":"0"}]},{"question":"3. Even though the money multiplier found in macroeconomics textbooks is a flawed description of the way the monetary system operates, having some positive minimum reserve requirements does constrain credit creation activities of the private banks more than if you have no requirements other than the rule that balances have to be non-zero.","ID":"1729","explanation":"","answers":[{"ID":"8730","answer":"False","correct":"1"},{"ID":"8729","answer":"True","correct":"0"}]}]}, {"ID":"441","name":"Quiz 2017 - 35","added_on":"2017-08-31 18:30:59","questions":[{"question":"1. Continuous fiscal deficits are more likely to present an inflation risk than one-off deficits designed to meet a short-term private spending decline. ","ID":"1730","explanation":"","answers":[{"ID":"8742","answer":"False","correct":"1"},{"ID":"8741","answer":"True","correct":"0"}]},{"question":"2. When a nation runs a current account deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit), we know that the private domestic sector will be spending less than they are earning.","ID":"1731","explanation":"","answers":[{"ID":"8744","answer":"False","correct":"1"},{"ID":"8743","answer":"True","correct":"0"}]},{"question":"3. To maintain financial stability, the monetary base has to be driven by changes in the money supply.","ID":"1732","explanation":"","answers":[{"ID":"8746","answer":"False","correct":"0"},{"ID":"8745","answer":"True","correct":"1"}]}]}, {"ID":"442","name":"Quiz 2017 - 36","added_on":"2017-09-07 08:02:03","questions":[{"question":"1. The statement that lending is capital-constrained rather than reserve constrained would not apply if the banks had to maintain a reserve ratio of 100 per cent.","ID":"1733","explanation":"","answers":[{"ID":"8754","answer":"False","correct":"1"},{"ID":"8753","answer":"True","correct":"0"}]},{"question":"2. A central bank can control bank lending by charging an increasing price for providing its reserves to the commercial banks while maintaining its target monetary policy rate.","ID":"1734","explanation":"","answers":[{"ID":"8756","answer":"False","correct":"1"},{"ID":"8755","answer":"True","correct":"0"}]},{"question":"3. If policy makers use the NAIRU to compute the decomposition between structural and cyclical fiscal balances, then if the estimated NAIRU is above the true full employment unemployment rate, the estimated impact of the automatic stabilisers will always be biased downwards.","ID":"1735","explanation":"","answers":[{"ID":"8760","answer":"False","correct":"0"},{"ID":"8759","answer":"True","correct":"1"}]}]}, {"ID":"443","name":"Quiz 2017 - 37","added_on":"2017-09-14 22:01:42","questions":[{"question":"1. When a sovereign government issues debt to match its fiscal deficit the debt adds to the financial wealth of the non-government sector.","ID":"1736","explanation":"","answers":[{"ID":"8778","answer":"False","correct":"1"},{"ID":"8777","answer":"True","correct":"0"}]},{"question":"2. Ignoring any reserve requirements that might be imposed, if the central bank pays a positive interest rate on overnight reserves held by the commercial banks then it may still have to conduct open market operations as a means of ensuring that levels of bank reserves are consistent with its policy target rate of interest.","ID":"1737","explanation":"","answers":[{"ID":"8776","answer":"False","correct":"0"},{"ID":"8775","answer":"True","correct":"1"}]},{"question":"3. If participation rates are constant, percentage unemployment will not change as long as employment growth matches the pace of growth in the working age population (people above 15 years of age).","ID":"1738","explanation":"","answers":[{"ID":"8774","answer":"False","correct":"0"},{"ID":"8773","answer":"True","correct":"1"}]}]}, {"ID":"444","name":"Quiz 2017 - 38","added_on":"2017-09-15 04:54:23","questions":[{"question":"1. If the inflation rate is steady and the central bank maintains a constant nominal interest rate, then the public debt ratio will rise if the government deficit doubles (say, from 2 to 4 per cent of GDP) although Modern Monetary Theory would not place any special importance in that increase.","ID":"1739","explanation":"","answers":[{"ID":"8798","answer":"False","correct":"1"},{"ID":"8797","answer":"True","correct":"0"}]},{"question":"2. Progressives have pointed out the slow or non-existent growth in real wages over the last decades. What they demand is that the rate of growth in earnings is faster than the growth in labour productivity. Is this sufficient to achieve their aim of real wages growth?","ID":"1740","explanation":"","answers":[{"ID":"8800","answer":"No","correct":"1"},{"ID":"8799","answer":"Yes","correct":"0"}]},{"question":"3. A fiscal surplus may not suggest that the national government is trying to slow the economy down and contain inflation.","ID":"1741","explanation":"","answers":[{"ID":"8802","answer":"False","correct":"0"},{"ID":"8801","answer":"True","correct":"1"}]}]}, {"ID":"445","name":"Quiz 2017 - 39","added_on":"2017-09-15 04:55:51","questions":[{"question":"1. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. If the private domestic sector successfully spends less than its overall income, then we would always find a public sector deficit.","ID":"1742","explanation":"","answers":[{"ID":"8804","answer":"False","correct":"0"},{"ID":"8803","answer":"True","correct":"1"}]},{"question":"2. The automatic stabilisers built into fiscal policy operate to return the government"s fiscal balance returns to its appropriate level once growth returns to trend following a downturn.","ID":"1743","explanation":"","answers":[{"ID":"8806","answer":"False","correct":"1"},{"ID":"8805","answer":"True","correct":"0"}]},{"question":"3. The government has to issue debt if the central bank is targetting a non-zero policy rate and is reluctant to pay a competitive return on excess bank reserves.","ID":"1744","explanation":"","answers":[{"ID":"8808","answer":"False","correct":"0"},{"ID":"8807","answer":"True","correct":"1"}]}]}, {"ID":"446","name":"Quiz 2017 - 40","added_on":"2017-09-15 04:57:10","questions":[{"question":"1. In terms of the initial impact on national income, a tax increase which aims to increase tax revenue at the current level of national income by $x is less damaging than a spending cut of $x?","ID":"1745","explanation":"","answers":[{"ID":"8810","answer":"False","correct":"0"},{"ID":"8809","answer":"True","correct":"1"}]},{"question":"2. When private households increase their saving ratios (from disposable income) and firms decline to invest more to cover the loss of consumption, the only option available to avoid overall employment losses, is for the government to expand public deficits.","ID":"1746","explanation":"","answers":[{"ID":"8816","answer":"False","correct":"1"},{"ID":"8815","answer":"True","correct":"0"}]},{"question":"3. If the external sector is accumulating financial claims on the local economy and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can run surpluses without damaging employment growth.","ID":"1747","explanation":"","answers":[{"ID":"8814","answer":"False","correct":"1"},{"ID":"8813","answer":"True","correct":"0"}]}]}, {"ID":"447","name":"Quiz 2017 - 41","added_on":"2017-10-12 18:21:51","questions":[{"question":"1. If the current account (on balance of payments) is in deficit and household saving increases as a proportion of disposable income then the government could still run a surplus without a decline in output and income occurring.","ID":"1748","explanation":"","answers":[{"ID":"8830","answer":"False","correct":"0"},{"ID":"8829","answer":"True","correct":"1"}]},{"question":"2. Quantitative easing tries to stimulate economic activity by reducing long-term investment rates whereas deficit spending adds to aggregate demand via tax cuts or direct public spending. Both policy effort add reserves to the banking system in different ways and involve an increase in the net financial assets held by the non-government sector.","ID":"1749","explanation":"","answers":[{"ID":"8834","answer":"False","correct":"1"},{"ID":"8833","answer":"True","correct":"0"}]},{"question":"3. Politics aside, the US central bank could still increase interest rates even if the US government instructed it to directly purchase treasury debt to facilitate the national governments fiscal deficit.","ID":"1750","explanation":"","answers":[{"ID":"8836","answer":"False","correct":"0"},{"ID":"8835","answer":"True","correct":"1"}]}]}, {"ID":"448","name":"Quiz 2017 - 42","added_on":"2017-10-12 18:23:19","questions":[{"question":"1. A hallmark of the neo-liberal period has been the declining share of wages in national income which in part meant that economic growth became more dependent on credit to maintain growth in consumption spending. Increasing the wage share requires a faster rate of growth in real wages in the coming years.","ID":"1751","explanation":"","answers":[{"ID":"8838","answer":"False","correct":"1"},{"ID":"8837","answer":"True","correct":"0"}]},{"question":"2. In a stock-flow consistent macroeconomics, the sectoral balance stocks all sum to zero.","ID":"1752","explanation":"","answers":[{"ID":"8840","answer":"False","correct":"1"},{"ID":"8839","answer":"True","correct":"0"}]},{"question":"3. Public spending can \\\"crowd out\\\" private spending.","ID":"1753","explanation":"","answers":[{"ID":"8842","answer":"False","correct":"1"},{"ID":"8841","answer":"True","correct":"0"}]}]}, {"ID":"449","name":"Quiz 2017 - 43","added_on":"2017-10-26 06:07:11","questions":[{"question":"1. At present all the EMU member nations face insolvency risk because they use a foreign currency. If one such national government left the Eurozone and re-established its own currency, converted all euro liabilities to that currency, then they would eliminate that risk on all future liabilities issued.","ID":"1754","explanation":"","answers":[{"ID":"8850","answer":"False","correct":"1"},{"ID":"8849","answer":"True","correct":"0"}]},{"question":"2. When a nation is enjoying a strong terms of trade with an external surplus, the government can create more space for non-inflationary spending in the future by running fiscal surpluses and accumulating them in a sovereign fund.","ID":"1755","explanation":"","answers":[{"ID":"8852","answer":"False","correct":"1"},{"ID":"8851","answer":"True","correct":"0"}]},{"question":"3. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP). A nation can run a current account deficit accompanied by a government sector surplus:","ID":"1756","explanation":"","answers":[{"ID":"8853","answer":"of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"8854","answer":"of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"8855","answer":"that is a larger proportion of GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"8856","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]}]}, {"ID":"450","name":"Quiz 2017 - 44","added_on":"2017-11-02 18:31:59","questions":[{"question":"1. Continuous fiscal deficits are a greater inflation risk than one-off deficits designed to meet a short-term private spending decline. ","ID":"1757","explanation":"","answers":[{"ID":"8864","answer":"False","correct":"1"},{"ID":"8863","answer":"True","correct":"0"}]},{"question":"2. A nation can run a current account deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit) but national income changes will force the private domestic sector to be spending more than it is earning.","ID":"1758","explanation":"","answers":[{"ID":"8866","answer":"False","correct":"0"},{"ID":"8865","answer":"True","correct":"1"}]},{"question":"3. To maintain financial stability, the monetary base has to be driven by changes in the money supply just as the money multiplier in mainstream macroeconomics textbooks explains.","ID":"1759","explanation":"","answers":[{"ID":"8868","answer":"False","correct":"1"},{"ID":"8867","answer":"True","correct":"0"}]}]}, {"ID":"451","name":"Quiz 2017 - 45","added_on":"2017-11-09 21:01:18","questions":[{"question":"1. Assuming the expenditure multiplier is greater than 1, deficit spending will have a greater impact on aggregate demand if there are no offsetting monetary operations by the central bank (government bond sales) draining the excess reserves created.","ID":"1760","explanation":"","answers":[{"ID":"8882","answer":"False","correct":"1"},{"ID":"8881","answer":"True","correct":"0"}]},{"question":"2. If the government succeeds in reducing its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"1761","explanation":"","answers":[{"ID":"8880","answer":"False","correct":"1"},{"ID":"8879","answer":"True ","correct":"0"}]},{"question":"3. Which fiscal deficit is the most expansionary?","ID":"1762","explanation":"","answers":[{"ID":"8875","answer":"1 per cent of GDP","correct":"0"},{"ID":"8876","answer":"2 per cent of GDP","correct":"0"},{"ID":"8877","answer":"3 per cent of GDP","correct":"1"},{"ID":"8878","answer":"Cannot say because it depends on the decomposition of the structural and cyclical components.","correct":"0"}]}]}, {"ID":"452","name":"Quiz 2017 - 46","added_on":"2017-11-17 04:05:42","questions":[{"question":"1. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.","ID":"1763","explanation":"","answers":[{"ID":"8890","answer":"False","correct":"0"},{"ID":"8889","answer":"True","correct":"1"}]},{"question":"2. For a nation running a current account deficit, national income adjustments will ensure government fiscal balance is in deficit if the private domestic sector seeks to increase its saving overall as a percentage of GDP.","ID":"1764","explanation":"","answers":[{"ID":"8892","answer":"False","correct":"0"},{"ID":"8891","answer":"True","correct":"1"}]},{"question":"3. If the central bank pays a positive interest rate on overnight reserves then it no longer would have to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements).","ID":"1765","explanation":"","answers":[{"ID":"8894","answer":"False","correct":"1"},{"ID":"8893","answer":"True","correct":"0"}]}]}, {"ID":"453","name":"Quiz 2017 - 47","added_on":"2017-11-23 16:41:13","questions":[{"question":"1. A fiscal rule that forces governments to run fiscal surpluses each year would equally force the private sector to run deficits and accumulate increasing levels of indebtedness as a result.","ID":"1766","explanation":"","answers":[{"ID":"8902","answer":"False","correct":"1"},{"ID":"8901","answer":"True","correct":"0"}]},{"question":"2. If a government is running an austerity program and learns that the estimated output gap was smaller than they originally thought, then other things equal, the governments discretionary fiscal austerity would have to be intensified to balance the structural fiscal balance. ","ID":"1767","explanation":"","answers":[{"ID":"8904","answer":"False","correct":"0"},{"ID":"8903","answer":"True","correct":"1"}]},{"question":"3. Opponents of continuous fiscal deficits often agree that a short-period of deficit spending when the private demand is weak is not likely to be inflationary. Their main concern is that it is the accumulated stock of spending associated with continuous fiscal deficits that eventually increases the risk of inflation. Their concern has some validity.","ID":"1768","explanation":"","answers":[{"ID":"8906","answer":"False","correct":"1"},{"ID":"8905","answer":"True","correct":"0"}]}]}, {"ID":"454","name":"Quiz 2017 - 48","added_on":"2017-11-23 16:58:51","questions":[{"question":"1. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.","ID":"1769","explanation":"","answers":[{"ID":"8914","answer":"False","correct":"1"},{"ID":"8913","answer":"True","correct":"0"}]},{"question":"2. A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, but national income changes will ensure that the private domestic sector is spending more than it earns and accumulating debt.","ID":"1770","explanation":"","answers":[{"ID":"8920","answer":"False","correct":"0"},{"ID":"8919","answer":"True","correct":"1"}]},{"question":"3. Government deficit spending would have a greater expansionary impact on aggregate demand if the central bank bought the public debt to match the deficit instead of a situation where the government matches it deficit by issuing debt to the private sector.","ID":"1771","explanation":"","answers":[{"ID":"8916","answer":"False","correct":"1"},{"ID":"8915","answer":"True","correct":"0"}]}]}, {"ID":"455","name":"Quiz 2017 - 49","added_on":"2017-12-07 05:13:20","questions":[{"question":"1. A fiscal surplus indicates that the national government is:","ID":"1772","explanation":"","answers":[{"ID":"8937","answer":"You cannot conclude anything about the government"s policy intentions.","correct":"1"},{"ID":"8936","answer":"Trying to reduce public debt.","correct":"0"},{"ID":"8935","answer":"Trying to slow the economy down to contain inflation.","correct":"0"},{"ID":"8938","answer":"Options (a) and (b)","correct":"0"}]},{"question":"2. Excessive real wage demands by workers can cause such mass unemployment. ","ID":"1773","explanation":"","answers":[{"ID":"8930","answer":"False","correct":"0"},{"ID":"8929","answer":"True","correct":"1"}]},{"question":"3. The Australian National Accounts data came out this week and showed that annual real GDP growth was running at 2.8 per cent per annum. Labour productivity growth over the last few years is around 1.3 per cent per annum, while the labour force has on average grown at 1.65 per cent per annum over the last two years. If the current GDP growth rate is sustained, average weekly working hours are unchanged, and the other aggregates behave according their recent averages then we should expect to see the unemployment rate rising.","ID":"1774","explanation":"","answers":[{"ID":"8940","answer":"False","correct":"0"},{"ID":"8939","answer":"True","correct":"1"}]}]}, {"ID":"456","name":"Quiz 2017 - 50","added_on":"2017-12-14 17:56:28","questions":[{"question":"1. Although we are told that a country is running a small current account deficit and that the private domestic sector is saving overall, we are unable to draw any conclusions about the state of the fiscal balance until we know the relative magnitudes of the other balances.","ID":"1775","explanation":"","answers":[{"ID":"8948","answer":"False","correct":"1"},{"ID":"8947","answer":"True","correct":"0"}]},{"question":"2. While a currency-issuing government does not have to issue bonds to match its deficit spending, one of the advantages of raising debt from the private sector is that it provides a boost to private wealth.","ID":"1776","explanation":"","answers":[{"ID":"8954","answer":"False","correct":"1"},{"ID":"8953","answer":"True","correct":"0"}]},{"question":"3. Fiscal austerity aims to reduce the stock of net government spending by reducing spending and/or increasing taxes.","ID":"1777","explanation":"","answers":[{"ID":"8952","answer":"False","correct":"1"},{"ID":"8951","answer":"True","correct":"0"}]}]}, {"ID":"457","name":"Quiz 2017 - 51","added_on":"2017-12-21 17:20:14","questions":[{"question":"1. If there is more \\\"money\\\" in the economy its value will decline.","ID":"1778","explanation":"","answers":[{"ID":"8964","answer":"False","correct":"1"},{"ID":"8963","answer":"True","correct":"0"}]},{"question":"2. A public works program that employs workers to dig deep holes on one day and then fill them in again the next day makes exactly the same contribution to current economic growth ($-for-$) as a private firm investing in a new factory to build jet airplanes or a new hospital.","ID":"1779","explanation":"","answers":[{"ID":"8966","answer":"False","correct":"0"},{"ID":"8965","answer":"True","correct":"1"}]},{"question":"3. Economists note that the automatic stabilisers built into fiscal policy, increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the fiscal outcome to the economic cycle would be eliminated if the government followed a rule that required a zero fiscal balance at all times ("balanced budget rule").","ID":"1780","explanation":"","answers":[{"ID":"8968","answer":"False","correct":"1"},{"ID":"8967","answer":"True","correct":"0"}]},{"question":"4. Special holiday question: Santa Claus and his elves are in danger of becoming environmental refugees because:","ID":"1781","explanation":"","answers":[{"ID":"8995","answer":"As the sea melts the methane deposits around the shoreline will be released and further accelerate global warming.","correct":"0"},{"ID":"8996","answer":"There is no threat - Santa Claus and climate change are just rumours spread by socialists.","correct":"1"},{"ID":"8993","answer":"Arctic sea ice shrank 18 per cent in the year to September 2012, accelerating a trend observed in recent years.","correct":"0"},{"ID":"8994","answer":"The National Oceanic and Atmospheric Administration predicts that the Arctic will have no summer sea ice within 30 years.","correct":"0"}]},{"question":"5. Special holiday question: The Australian Bureau of Statistics does not record official reindeer numbers. However, the Population Census tells us that there are several deer farmers in Australia who could help Santa should any of his deer get tired as he flies around Australia in the early hours of Monday morning. The Census shows that there are:","ID":"1782","explanation":"","answers":[{"ID":"8979","answer":"35 deer farmers in Australia.","correct":"1"},{"ID":"8978","answer":"25 deer farmers in Australia.","correct":"0"},{"ID":"8977","answer":"15 deer farmers in Australia.","correct":"0"},{"ID":"8980","answer":"I just made this all up.","correct":"0"}]}]}, {"ID":"458","name":"Quiz 2017 - 52","added_on":"2017-12-28 02:16:07","questions":[{"question":"1. When the government matches its deficit with debt-issuance it changes the portfolio of wealth held in the non-government sector. The impact on purchasing power is equivalent to a leakage from the expenditure system (akin to taxation, saving or imports) which reduces the expansionary impact of the government deficit spending.","ID":"1783","explanation":"","answers":[{"ID":"9008","answer":"False","correct":"1"},{"ID":"9007","answer":"True","correct":"0"}]},{"question":"2. A public employment guarantee program, which required workers to attend a government centre each day to do jigsaw puzzles, would have no impact on national income.","ID":"1784","explanation":"","answers":[{"ID":"9006","answer":"False","correct":"1"},{"ID":"9005","answer":"True","correct":"0"}]},{"question":"3. If the government reduces its net spending by say $10 billion, the net financial assets destroyed by this fiscal withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"1785","explanation":"","answers":[{"ID":"9004","answer":"False","correct":"1"},{"ID":"9003","answer":"True","correct":"0"}]}]}, {"ID":"459","name":"Quiz 2018 - 1","added_on":"2018-01-04 20:35:26","questions":[{"question":"1. A rising fiscal deficit indicates an expansionary shift in government policy and the challenge is to ensure the nominal demand stimulus does not exceed the real capacity of the economy to respond by increasing real output.","ID":"1786","explanation":"","answers":[{"ID":"9016","answer":"False","correct":"1"},{"ID":"9015","answer":"True","correct":"0"}]},{"question":"2. The imposition of taxes by the national government creates unemployment, other things equal.","ID":"1787","explanation":"","answers":[{"ID":"9018","answer":"False","correct":"0"},{"ID":"9017","answer":"True","correct":"1"}]},{"question":"3. The automatic stabilisers work in a counter-cyclical fashion and ensure that the government fiscal balance returns to its appropriate level following a recession.","ID":"1788","explanation":"","answers":[{"ID":"9020","answer":"False","correct":"1"},{"ID":"9019","answer":"True","correct":"0"}]}]}, {"ID":"460","name":"Quiz 2018 - 2","added_on":"2018-01-11 17:58:34","questions":[{"question":"1. The net worth of the non-government sector rises immediately as a result of the government issuing bonds to exactly match ($-for-$) the increase in net public spending.","ID":"1789","explanation":"","answers":[{"ID":"9028","answer":"False","correct":"1"},{"ID":"9027","answer":"True","correct":"0"}]},{"question":"2. Assume that a national is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would always find:","ID":"1790","explanation":"","answers":[{"ID":"9029","answer":"A fiscal deficit","correct":"1"},{"ID":"9030","answer":"A fiscal surplus","correct":"0"},{"ID":"9031","answer":"Cannot tell because we don"t know the scale of the private domestic sector saving as a % of GDP.","correct":"0"}]},{"question":"3. At present inflation and nominal interest rates are low and constant (so for this question, assume they are both zero and constant). Consider a country with a public debt to GDP ratio of 100 per cent, which the mainstream economists consider to be dangerously high. The mainstream prescription is to run primary fiscal surpluses to stabilise and then reduce the debt ratio. Under the circumstances given, this strategy will only work if there is real GDP growth.","ID":"1791","explanation":"","answers":[{"ID":"9033","answer":"False","correct":"1"},{"ID":"9032","answer":"True","correct":"0"}]}]}, {"ID":"461","name":"Quiz 2018 - 3","added_on":"2018-01-18 17:33:26","questions":[{"question":"1. The central bank can influence the supply of money via the price it provides reserves to the commercial banks but this influence is compromised by the level at which it sets the target monetary policy rate.","ID":"1792","explanation":"","answers":[{"ID":"9041","answer":"False","correct":"0"},{"ID":"9040","answer":"True","correct":"1"}]},{"question":"2. If the private domestic sector spends less than it earns and the nation runs a small external deficit, then the government fiscal balance will always be in deficit at all levels of national income.","ID":"1793","explanation":"","answers":[{"ID":"9053","answer":"False","correct":"0"},{"ID":"9052","answer":"True","correct":"1"}]},{"question":"3. A central bank can easily purchase treasury debt directly to satisfy accounting arrangements relating to the national governments fiscal deficit (that is, \\\"monetise the deficit\\\") while still targeting a positive short-term policy rate.","ID":"1794","explanation":"","answers":[{"ID":"9051","answer":"False","correct":"0"},{"ID":"9050","answer":"True","correct":"1"}]}]}, {"ID":"462","name":"Quiz 2018 - 4","added_on":"2018-01-25 17:46:29","questions":[{"question":"1. A currency-issuing government can run a balanced fiscal position (spending equals tax receipts) over the economic cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will only be in surplus if the external balance is in surplus.","ID":"1795","explanation":"","answers":[{"ID":"9063","answer":"False","correct":"0"},{"ID":"9062","answer":"True","correct":"1"}]},{"question":"2. A basic understanding of Modern Monetary Theory (MMT) would leave you to conclude that excessive real wage demands by workers can cause unemployment.","ID":"1796","explanation":"","answers":[{"ID":"9061","answer":"False","correct":"0"},{"ID":"9060","answer":"True","correct":"1"}]},{"question":"3. The achievement of a fiscal surplus indicates that the national government is:","ID":"1797","explanation":"","answers":[{"ID":"9069","answer":"You cannot conclude anything about the government"s policy intentions.","correct":"1"},{"ID":"9068","answer":"Trying to reduce public debtn","correct":"0"},{"ID":"9067","answer":"Trying to slow the economy down and contain inflation.","correct":"0"}]}]}, {"ID":"463","name":"Quiz 2018 - 5","added_on":"2018-02-01 15:48:02","questions":[{"question":"1. When an economy is running a current account deficit, only one of the two remaining sectors (government or private domestic) can be in surplus, irrespective of the GDP growth rate.","ID":"1798","explanation":"","answers":[{"ID":"9079","answer":"False","correct":"0"},{"ID":"9078","answer":"True","correct":"1"}]},{"question":"2. Unlike a household, which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government debt, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"1799","explanation":"","answers":[{"ID":"9081","answer":"False","correct":"1"},{"ID":"9080","answer":"True","correct":"0"}]},{"question":"3. Over the last two decades, there have been major redistributions of national income towards profits in many nations. This has occurred as a result of the suppression of real wages growth.","ID":"1800","explanation":"","answers":[{"ID":"9077","answer":"False","correct":"1"},{"ID":"9076","answer":"True","correct":"0"}]}]}, {"ID":"464","name":"Quiz 2018 - 6","added_on":"2018-02-08 15:31:33","questions":[{"question":"1. In the endogenous money system that exists today, a central bank cannot simultaneously reduce bank lending and maintain a given positive target interest rate by increasing the rate that it provides reserves on demand to the commercial banks.","ID":"1801","explanation":"","answers":[{"ID":"9093","answer":"False","correct":"0"},{"ID":"9092","answer":"True","correct":"1"}]},{"question":"2. The fact that a sovereign government is never financially constrained means that it will always be able to provide first-class health care to an ageing population should it have the political will to do so.","ID":"1802","explanation":"","answers":[{"ID":"9091","answer":"False","correct":"1"},{"ID":"9090","answer":"True","correct":"0"}]},{"question":"3. Whether the government records a fiscal deficit when the domestic private sector is spending less than it earns depends on the size of the external deficit.","ID":"1803","explanation":"","answers":[{"ID":"9089","answer":"False","correct":"1"},{"ID":"9088","answer":"True","correct":"0"}]}]}, {"ID":"465","name":"Quiz 2018 - 7","added_on":"2018-02-14 16:37:14","questions":[{"question":"1. If the growth in wages (the money you get paid) keeps pace with inflation which is accelerating at the same rate as labour productivity is growing then the profit share in GDP remains constant.","ID":"1804","explanation":"","answers":[{"ID":"9101","answer":"False","correct":"0"},{"ID":"9100","answer":"True","correct":"1"},{"ID":"9102","answer":"Cannot tell from this information","correct":"0"}]},{"question":"2. The expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance because then excess reserves are drained and the purchasing power is taken out of the monetary system.","ID":"1805","explanation":"","answers":[{"ID":"9104","answer":"False","correct":"1"},{"ID":"9103","answer":"True","correct":"0"}]},{"question":"3. A government is choosing between a tax cut that will reduce tax revenue at the current level of national income by $x (that is, increase private domestic disposable income by $x) and a public spending increase of $x. Which policy option will have the greater initial impact on aggregate spending?","ID":"1806","explanation":"","answers":[{"ID":"9112","answer":"There is not enough information to answer this question","correct":"0"},{"ID":"9111","answer":"Both will be equivalent","correct":"0"},{"ID":"9109","answer":"Tax cut","correct":"0"},{"ID":"9110","answer":"Spending increase","correct":"1"}]}]}, {"ID":"466","name":"Quiz 2018 - 8","added_on":"2018-02-22 20:02:10","questions":[{"question":"1. Estimates of cyclical fiscal balances by the IMF and other bodies are typically biased upward.","ID":"1807","explanation":"","answers":[{"ID":"9120","answer":"False","correct":"1"},{"ID":"9119","answer":"True","correct":"0"}]},{"question":"2. For nations with an external surplus (such as Norway), it is sensible for the government to run fiscal surpluses and accumulate them in a sovereign fund to create more space for non-inflationary spending in the future.","ID":"1808","explanation":"","answers":[{"ID":"9124","answer":"False","correct":"1"},{"ID":"9123","answer":"True","correct":"0"}]},{"question":"3. We would never observe a state where a nation was running an external deficit (trade and income flows), a fiscal surplus and the private domestic sector was spending less than it was generating.","ID":"1809","explanation":"","answers":[{"ID":"9126","answer":"False","correct":"0"},{"ID":"9125","answer":"True","correct":"1"}]}]}, {"ID":"467","name":"Quiz 2018 - 9","added_on":"2018-02-22 20:26:39","questions":[{"question":"1. After economic growth resumes, the government can rely on the automatic stabilisers to return the fiscal balance to its appropriate level.","ID":"1810","explanation":"","answers":[{"ID":"9152","answer":"False","correct":"1"},{"ID":"9151","answer":"True","correct":"0"}]},{"question":"2. Only one of the following combinations is possible for a nation (balances expressed as a proportion of GDP):","ID":"1811","explanation":"","answers":[{"ID":"9150","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"},{"ID":"9149","answer":"Current account deficit smaller in size to government surplus, and private domestic sector saving overall.","correct":"0"},{"ID":"9148","answer":"Current account deficit equal in size to government surplus, and private domestic sector dissaving overall.","correct":"1"},{"ID":"9147","answer":"Current account deficit equal in size to government surplus, and private domestic sector saving overall.","correct":"0"}]},{"question":"3. The Eurozone nations have to endure internal devaluation (nominal wages and prices deflation and/or productivity growth) to adjust to external imbalances. It is claimed that this process will the individual nations more competitive as long as real unit labour costs fall faster than their trading partners. However, ignoring whether the logic is correct or not, which of the following propositions must also follow if the logic is to follow:","ID":"1812","explanation":"","answers":[{"ID":"9155","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and what happens to employment is irrelevant.","correct":"1"},{"ID":"9154","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and employment must grow.","correct":"0"},{"ID":"9153","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and employment remain constant or grow.","correct":"0"},{"ID":"9156","answer":"None of the above.","correct":"0"}]}]}, {"ID":"468","name":"Quiz 2018 - 10","added_on":"2018-02-22 20:28:06","questions":[{"question":"1. A sovereign national government can run a balanced fiscal position over the business cycle (peak to peak) as long as it accepts that, after all the spending adjustments are exhausted, the private domestic balance will mirror the external balance. That means a country running an external deficit will have an increasingly indebted private domestic sector.","ID":"1813","explanation":"","answers":[{"ID":"9162","answer":"False","correct":"0"},{"ID":"9161","answer":"True","correct":"1"}]},{"question":"2. A nation that manages its currency via a currency board (for example, Estonia and Latvia) has to have sufficient foreign reserves to match the outstanding central bank liabilities (reserves and cash outstanding). Under this arrangement it can always guarantee 100 per cent convertibility but has to endure deflationary tendencies unless it runs external surpluses.","ID":"1814","explanation":"","answers":[{"ID":"9164","answer":"False","correct":"0"},{"ID":"9163","answer":"True","correct":"1"}]},{"question":"3. Modern Monetary Theory (MMT) allows for the possibility that trade union power can cause mass unemployment.","ID":"1815","explanation":"","answers":[{"ID":"9158","answer":"False","correct":"0"},{"ID":"9157","answer":"True","correct":"1"}]}]}, {"ID":"469","name":"Quiz 2018 - 11","added_on":"2018-03-15 20:16:44","questions":[{"question":"1. Start from a situation where both the external surplus and the fiscal surplus are equal to 2 per cent of GDP. If the fiscal balance stays constant and the external surplus rises to be 4 per cent of GDP then national income has to rise and the private domestic balance moves from 0 to 2 per cent of GDP.","ID":"1816","explanation":"","answers":[{"ID":"9172","answer":"False","correct":"0"},{"ID":"9171","answer":"True","correct":"1"}]},{"question":"2. If all bank loans had to be backed by reserves held at the bank then this would act as a brake on the capacity of the banks to lend.","ID":"1817","explanation":"","answers":[{"ID":"9174","answer":"False","correct":"1"},{"ID":"9173","answer":"True","correct":"0"}]},{"question":"3. Assume a nation"s central bank successfully maintains a zero interest rate policy and recession keeps the inflation rate at zero. Under these circumstances a program of fiscal austerity can reduce the public debt ratio even if the movements in the automatic stabilisers reduce the growth of tax revenue.","ID":"1818","explanation":"","answers":[{"ID":"9176","answer":"False","correct":"0"},{"ID":"9175","answer":"True","correct":"1"}]}]}, {"ID":"470","name":"Quiz 2018 - 12","added_on":"2018-03-22 20:48:08","questions":[{"question":"1. One interpretation of the sectoral balances decomposition of the national accounts, is that it is impossible for all governments (in all nations) to run public surpluses without impairing growth because it is likely that the private domestic sector in some countries will desire to save overall.","ID":"1819","explanation":"","answers":[{"ID":"9190","answer":"False","correct":"1"},{"ID":"9189","answer":"True","correct":"0"}]},{"question":"2. A rising government deficit will always allow the private domestic sector to increase its saving in nominal terms.","ID":"1820","explanation":"","answers":[{"ID":"9192","answer":"False","correct":"1"},{"ID":"9191","answer":"True","correct":"0"}]},{"question":"3. A rising government deficit indicates an expansionary shift in policy and the challenge is to calibrate that expansion to ensure nominal demand growth does not exceed the real capacity of the economy to respond by increasing real output.","ID":"1821","explanation":"","answers":[{"ID":"9194","answer":"False","correct":"1"},{"ID":"9193","answer":"True","correct":"0"}]}]}, {"ID":"471","name":"Quiz 2018 - 13","added_on":"2018-03-29 22:03:34","questions":[{"question":"1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, until we know the relative magnitudes of these balances, we are unable to conclude the state of the fiscal balance.","ID":"1822","explanation":"","answers":[{"ID":"9208","answer":"False","correct":"1"},{"ID":"9207","answer":"True","correct":"0"}]},{"question":"2. Current private sector wealth is invariant to the decision by government to issues bonds to match its deficit spending as against not issuing any bonds.","ID":"1823","explanation":"","answers":[{"ID":"9212","answer":"False","correct":"0"},{"ID":"9211","answer":"True","correct":"1"}]},{"question":"3. When a government records a fiscal surplus, which means it is withdrawing more purchasing power from the economy than it is adding, we know that it is seeking to attenuate the growth in aggregate spending.","ID":"1824","explanation":"","answers":[{"ID":"9210","answer":"False","correct":"1"},{"ID":"9209","answer":"True","correct":"0"}]}]}, {"ID":"472","name":"Quiz 2018 - 14","added_on":"2018-04-05 07:14:11","questions":[{"question":"1. The private domestic sector can save overall even if the government fiscal balance is in surplus as long as net exports are positive.","ID":"1825","explanation":"","answers":[{"ID":"9220","answer":"False","correct":"1"},{"ID":"9219","answer":"True","correct":"0"}]},{"question":"2. The only difference between quantitative easing and a discretionary fiscal injection is which branch of government is responsible for the stimulus.","ID":"1826","explanation":"","answers":[{"ID":"9224","answer":"False","correct":"1"},{"ID":"9223","answer":"True","correct":"0"}]},{"question":"3. While continuous national governments deficits are possible if the non-government sector desires to save, they do imply continuously rising public debt levels as a percentage of GDP.","ID":"1827","explanation":"","answers":[{"ID":"9222","answer":"False","correct":"1"},{"ID":"9221","answer":"True","correct":"0"}]}]}, {"ID":"473","name":"Quiz 2018 - 15","added_on":"2018-04-12 21:15:04","questions":[{"question":"1. Assume that the external deficit of a nation is on average over the economic cycle equal to 2 per cent of GDP and that the government balances its fiscal position when averaged over the same cycle. We can conclude that on average the private domestic sector overall:","ID":"1828","explanation":"","answers":[{"ID":"9240","answer":"Cannot say for sure as we don"t know the pattern of fiscal balances over the cycle.","correct":"0"},{"ID":"9238","answer":"Is spending more than it is earning.","correct":"1"},{"ID":"9239","answer":"Is spending less that it is earning.","correct":"0"}]},{"question":"2. Trade unions that manage to push aggregate wages growth ahead of the inflation rate will ensure that workers gain a greater share of national income.","ID":"1829","explanation":"","answers":[{"ID":"9235","answer":"False","correct":"1"},{"ID":"9234","answer":"True","correct":"0"}]},{"question":"3. Sovereign government spending becomes more expensive when government bond yields for new issues rise.","ID":"1830","explanation":"","answers":[{"ID":"9237","answer":"False","correct":"1"},{"ID":"9236","answer":"True","correct":"0"}]}]}, {"ID":"474","name":"Quiz 2018 - 16","added_on":"2018-04-19 21:46:37","questions":[{"question":"1. If the real interest rate (difference between nominal interest rate and inflation) is constant, then a currency-issuing government, which matches its net spending $-for-$ with debt issuance, could double its fiscal deficit without pushing up the public debt ratio.","ID":"1831","explanation":"","answers":[{"ID":"9254","answer":"False","correct":"0"},{"ID":"9253","answer":"True","correct":"1"}]},{"question":"2. A government in any nation that achieves positive net exports can push for a primary fiscal surplus knowing it will not compromise growth.","ID":"1832","explanation":"","answers":[{"ID":"9256","answer":"False","correct":"1"},{"ID":"9255","answer":"True","correct":"0"}]},{"question":"3. Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current interest rate target. If on average the government collects an income tax of 20 cents in the dollar, then total tax revenue will rise by 0.20 times $x if government spending increases (once and for all) by $X dollars and private investment and exports remain unchanged.","ID":"1833","explanation":"","answers":[{"ID":"9252","answer":"False","correct":"1"},{"ID":"9251","answer":"True","correct":"0"}]}]}, {"ID":"475","name":"Quiz 2018 - 17","added_on":"2018-04-26 20:00:26","questions":[{"question":"1. Modern Monetary Theory teaches us that one of the dangers of public deficits is that they can crowd out private spending.","ID":"1834","explanation":"","answers":[{"ID":"9264","answer":"False","correct":"0"},{"ID":"9263","answer":"True","correct":"1"}]},{"question":"2. National accounting shows us that a government surplus equals a non-government deficit. But that doesn"t mean that if fiscal austerity ends up generating a fiscal surplus that households and firms will be running deficits.","ID":"1835","explanation":"","answers":[{"ID":"9266","answer":"False","correct":"0"},{"ID":"9265","answer":"True","correct":"1"}]},{"question":"3. The payment of a positive interest return by the central bank on overnight bank reserves does not eliminate the need for it to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements). ","ID":"1836","explanation":"","answers":[{"ID":"9268","answer":"False","correct":"0"},{"ID":"9267","answer":"True","correct":"1"}]}]}, {"ID":"476","name":"Quiz 2018 - 18","added_on":"2018-05-03 21:11:24","questions":[{"question":"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: ","ID":"1837","explanation":"","answers":[{"ID":"9284","answer":"Surplus of 1 per cent of GDP","correct":"0"},{"ID":"9283","answer":"Deficit of 1 per cent of GDP","correct":"1"}]},{"question":"2. If the private domestic sector is locked into a process of deleveraging, then to avoid the employment losses arising from this lost private spending, governments have to expand public deficits.","ID":"1838","explanation":"","answers":[{"ID":"9280","answer":"False","correct":"1"},{"ID":"9279","answer":"True","correct":"0"}]},{"question":"3. If the external sector is accumulating financial claims on the local economy (that is, providing foreign savings to the domestic economy) and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can both run surpluses without damaging employment growth.","ID":"1839","explanation":"","answers":[{"ID":"9282","answer":"False","correct":"1"},{"ID":"9281","answer":"True","correct":"0"}]}]}, {"ID":"477","name":"Quiz 2018 - 19","added_on":"2018-05-10 23:18:14","questions":[{"question":"1. If a nation has an external deficit and household saving increases as a proportion of disposable income then the government cannot run a fiscal surplus without output falling.","ID":"1840","explanation":"","answers":[{"ID":"9292","answer":"False","correct":"1"},{"ID":"9291","answer":"True","correct":"0"}]},{"question":"2. Politics aside, the US central bank could still increase interest rates even if the US government instructed it to directly purchase treasury debt to facilitate the national governments fiscal deficit.","ID":"1841","explanation":"","answers":[{"ID":"9294","answer":"False","correct":"0"},{"ID":"9293","answer":"True","correct":"1"}]},{"question":"3. A continuous fiscal deficit leads to public spending building up which while not a problem in the short-run, increases the long-run inflation risk faced by the economy.","ID":"1842","explanation":"","answers":[{"ID":"9296","answer":"False","correct":"1"},{"ID":"9295","answer":"True","correct":"0"}]}]}, {"ID":"478","name":"Quiz 2018 - 20","added_on":"2018-05-18 04:26:17","questions":[{"question":"1. In a fixed coupon government bond auction, the higher is the demand for the bonds the:","ID":"1843","explanation":"","answers":[{"ID":"9312","answer":"lower the yields will be at that maturity but this tells us nothing about the fiscal effect on short-term interest rates.","correct":"1"},{"ID":"9311","answer":"lower the yields will be at that maturity, suggesting that higher fiscal deficits will soon drive short-term interest rates down.","correct":"0"},{"ID":"9310","answer":"higher the yields will be at that maturity, suggesting that higher fiscal deficits will soon drive short-term interest rates down.","correct":"0"}]},{"question":"2. A sovereign government does not have to issue debt to match any spending above taxation. But the more public debt it voluntarily issues the more difficult it is for banks to attract deposits to initiate loans from.","ID":"1844","explanation":"","answers":[{"ID":"9307","answer":"False","correct":"1"},{"ID":"9306","answer":"True","correct":"0"}]},{"question":"3. When an external deficit and public deficit coincide, there must be a private sector deficit.","ID":"1845","explanation":"","answers":[{"ID":"9309","answer":"False","correct":"1"},{"ID":"9308","answer":"True","correct":"0"}]}]}, {"ID":"479","name":"Quiz 2018 - 21","added_on":"2018-05-24 18:36:47","questions":[{"question":"1. As long as employment growth keeps pace with labour force growth, unemployment will not rise.","ID":"1846","explanation":"","answers":[{"ID":"9320","answer":"False","correct":"1"},{"ID":"9319","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory shows that governments do not have to issue debt to match their deficit spending. However, byissuing debt, the wealth of the non-government sector immediately increases, which would not happen if the central bank just credited bank accounts on behalf of the treasury without the debt matching.","ID":"1847","explanation":"","answers":[{"ID":"9322","answer":"False","correct":"1"},{"ID":"9321","answer":"True","correct":"0"}]},{"question":"3. If the current account balance is running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must:","ID":"1848","explanation":"","answers":[{"ID":"9323","answer":"Be running a surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"9324","answer":"Be running a surplus equal to 5 per cent of GDP.","correct":"0"},{"ID":"9325","answer":"Be running a deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"9326","answer":"Be running a deficit equal to 5 per cent of GDP.","correct":"0"}]}]}, {"ID":"480","name":"Quiz 2018 - 22","added_on":"2018-05-31 04:18:05","questions":[{"question":"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:","ID":"1849","explanation":"","answers":[{"ID":"9354","answer":"National income falls and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"},{"ID":"9353","answer":"National income remains unchanged and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"},{"ID":"9352","answer":"National income rises and the private surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"1"},{"ID":"9351","answer":"National income falls and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"9350","answer":"National income remains unchanged and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"9349","answer":"National income rises and the private surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"}]},{"question":"2. A rising fiscal deficit tells us that the government is pursuing an increasingly expansionary fiscal stance.n","ID":"1850","explanation":"","answers":[{"ID":"9356","answer":"False","correct":"1"},{"ID":"9355","answer":"True","correct":"0"}]},{"question":"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. ","ID":"1851","explanation":"","answers":[{"ID":"9348","answer":"False","correct":"1"},{"ID":"9347","answer":"True","correct":"0"}]}]}, {"ID":"481","name":"Quiz 2018 - 23","added_on":"2018-06-07 20:07:45","questions":[{"question":"1. Real wages growth has been non-existent or low in many advanced nations in recent years. However, if workers succeed in gaining real wages increases then this will squeeze the share of profits in national income.","ID":"1852","explanation":"","answers":[{"ID":"9364","answer":"False","correct":"1"},{"ID":"9363","answer":"True","correct":"0"}]},{"question":"2. The government has to issue debt to match an on-going fiscal deficit if the central bank is targetting, say a 2 per cent short-term interest rate and declines to pay a return on excess bank reserves.","ID":"1853","explanation":"","answers":[{"ID":"9366","answer":"False","correct":"0"},{"ID":"9365","answer":"True","correct":"1"}]},{"question":"3. Suppose that the government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports plus net income flows were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.","ID":"1854","explanation":"","answers":[{"ID":"9368","answer":"False","correct":"0"},{"ID":"9367","answer":"True","correct":"1"}]}]}, {"ID":"482","name":"Quiz 2018 - 24","added_on":"2018-06-14 20:52:18","questions":[{"question":"1. An external surplus is a necessary but not sufficient condition for a nation that wishes to grow during a period of fiscal surpluses and private domestic deleveraging.","ID":"1855","explanation":"","answers":[{"ID":"9386","answer":"False","correct":"0"},{"ID":"9385","answer":"True","correct":"1"}]},{"question":"2. When a nation"s fiscal deficit is declining it tells us that the government has fallen into an austerity mindset.","ID":"1856","explanation":"","answers":[{"ID":"9378","answer":"False","correct":"1"},{"ID":"9377","answer":"True","correct":"0"}]},{"question":"3. The only way a nation can reduce its public debt ratio (short of defaulting) is for the government to start running primary fiscal surpluses (that is, when spending net of interest payments is less than taxation revenue).","ID":"1857","explanation":"","answers":[{"ID":"9382","answer":"False","correct":"1"},{"ID":"9381","answer":"True ","correct":"0"}]}]}, {"ID":"483","name":"Quiz 2018 - 25","added_on":"2018-06-20 21:28:12","questions":[{"question":"1. A rising household saving ratio combined with a rising external deficit that drains aggregate spending, doesn"t necessarily mean that the government deficit has to rise to maintain current output growth. ","ID":"1858","explanation":"","answers":[{"ID":"9394","answer":"False","correct":"0"},{"ID":"9393","answer":"True","correct":"1"}]},{"question":"2. If the European Commission relaxed the fiscal rules restricting Member State governments under the Stability and Growth Pact (3 per cent deficit to GDP ratios and 60 per cent public debt to GDP ratios) then the solvency risk that several EMU members faced during the GFC would have been resolved.","ID":"1859","explanation":"","answers":[{"ID":"9398","answer":"False","correct":"1"},{"ID":"9397","answer":"True","correct":"0"}]},{"question":"3. Mainstream economists have argued that the large scale quantitative easing conducted by central banks in recent years - so-called printing money - would be inflationary. They based their predictions on the Classical Quantity Theory of Money which links the growth of the money stock to the inflation rate (too much money chasing too few goods). The fact that inflation has not accelerated sharply indicates that this mainstream economic theory should be discarded. ","ID":"1860","explanation":"","answers":[{"ID":"9400","answer":"False","correct":"1"},{"ID":"9399","answer":"True ","correct":"0"}]}]}, {"ID":"484","name":"Quiz 2018 - 26","added_on":"2018-06-28 07:56:06","questions":[{"question":"1. Irrespective of what the government does, the private domestic sector can save overall, as long as the net exports are positive.","ID":"1861","explanation":"","answers":[{"ID":"9408","answer":"False","correct":"1"},{"ID":"9407","answer":"True","correct":"0"}]},{"question":"2. A rising government deficit indicates that the government fiscal stance is becoming more expansionary.","ID":"1862","explanation":"","answers":[{"ID":"9410","answer":"False","correct":"1"},{"ID":"9409","answer":"True","correct":"0"}]},{"question":"3. The logic of the Greek bailout packages is to force the government to run primary fiscal surpluses. This is because posting primary surpluses is the only way to reduce Greece"s public debt ratio.n","ID":"1863","explanation":"","answers":[{"ID":"9412","answer":"False","correct":"1"},{"ID":"9411","answer":"True","correct":"0"}]}]}, {"ID":"485","name":"Quiz 2018 - 27","added_on":"2018-07-05 22:26:34","questions":[{"question":"1. Modern Monetary Theory (MMT) recognises that the unemployed live of the hard work of those that are employed.","ID":"1864","explanation":"","answers":[{"ID":"9420","answer":"False","correct":"0"},{"ID":"9419","answer":"True","correct":"1"}]},{"question":"2. The accumulated spending build-up of annual fiscal deficits does not pose an inflation threat.","ID":"1865","explanation":"","answers":[{"ID":"9422","answer":"False","correct":"1"},{"ID":"9421","answer":"True","correct":"0"}]},{"question":"3. Which scenario represents a more expansionary outcome: (a) A fiscal deficit equivalent to 5 per cent of GDP (including the impact of automatic stabilisers equivalent to 3 per cent of GDP). (b) A fiscal deficit equivalent to 3 per cent of GDP. (c) You cannot tell because you do not know the decomposition between the cyclical and structural components in Option (b) ","ID":"1866","explanation":"","answers":[{"ID":"9423","answer":"Option (a)","correct":"1"},{"ID":"9424","answer":"Option (b)","correct":"0"},{"ID":"9425","answer":"Option (c)","correct":"0"}]}]}, {"ID":"486","name":"Quiz 2018 - 28","added_on":"2018-07-12 19:18:07","questions":[{"question":"1. The value of money inevitably declines if the money supply rises.","ID":"1867","explanation":"","answers":[{"ID":"9433","answer":"False","correct":"1"},{"ID":"9432","answer":"True","correct":"0"}]},{"question":"2. Economists note that the automatic stabilisers in-built into government fiscal policy increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the fiscal outcome to the economic cycle would not be eliminated if the government followed a fiscal rule such that it had to balance its fiscal outcome at all times.","ID":"1868","explanation":"","answers":[{"ID":"9435","answer":"False","correct":"0"},{"ID":"9434","answer":"True","correct":"1"}]},{"question":"3. One advantage of low inflation is that the central bank can better use balance sheet management techniques to control yields on public debt at certain targetted maturities.","ID":"1869","explanation":"","answers":[{"ID":"9437","answer":"False","correct":"0"},{"ID":"9436","answer":"True","correct":"1"}]}]}, {"ID":"487","name":"Quiz 2018 - 29","added_on":"2018-07-19 21:08:35","questions":[{"question":"1. As a matter of accounting, the net financial assets held by the non-government sector rise $-for-$ when a sovereign government issues debt.","ID":"1870","explanation":"","answers":[{"ID":"9445","answer":"False","correct":"1"},{"ID":"9444","answer":"True","correct":"0"}]},{"question":"2. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the private domestic sector cannot reduce its overall debt levels (by overall saving) without incurring employment losses.","ID":"1871","explanation":"","answers":[{"ID":"9447","answer":"False","correct":"0"},{"ID":"9446","answer":"True","correct":"1"}]},{"question":"3. The imposition of fiscal rules which aim to limit the discretionary capacity of governments to net spend bias fiscal policy towards counter-cyclical responses when private spending is weak.","ID":"1872","explanation":"","answers":[{"ID":"9449","answer":"False","correct":"1"},{"ID":"9448","answer":"True","correct":"0"}]}]}, {"ID":"488","name":"Quiz 2018 - 30","added_on":"2018-07-26 20:49:36","questions":[{"question":"1. If we observe rising yields on 10-year government bond yields then we can safely conclude that bond investors are demanding increased risk premiums for these assets. ","ID":"1873","explanation":"","answers":[{"ID":"9457","answer":"False","correct":"1"},{"ID":"9456","answer":"True","correct":"0"}]},{"question":"2. If a nation that is running an on-going external deficit is to avoid a recession, then the government spending (relative to taxation) has to rise if the household saving ratio rises.","ID":"1874","explanation":"","answers":[{"ID":"9459","answer":"False","correct":"1"},{"ID":"9458","answer":"True","correct":"0"}]},{"question":"3. While a currency-issuing government does not have to issue debt to fund its deficit spending, the debt-issuance does reduce the inflation risk associated with the deficits.","ID":"1875","explanation":"","answers":[{"ID":"9463","answer":"False","correct":"1"},{"ID":"9462","answer":"True","correct":"0"}]}]}, {"ID":"489","name":"Quiz 2018 - 31","added_on":"2018-08-02 19:33:55","questions":[{"question":"1. National accounting rules dictate that a national government surplus equals a non-government deficit (and vice-versa). If a national government successfully achieves a fiscal surplus through an austerity program then the private domestic sector must be spending more than it is earning.","ID":"1876","explanation":"","answers":[{"ID":"9471","answer":"False","correct":"1"},{"ID":"9470","answer":"True","correct":"0"}]},{"question":"2. A government"s fiscal deficit rises despite the government"s stated fiscal austerity stance. We can conclude from the evidence at hand that the austerity mantra of the government doesn"t correctly describe its fiscal policy stance.","ID":"1877","explanation":"","answers":[{"ID":"9473","answer":"False","correct":"1"},{"ID":"9472","answer":"True","correct":"0"}]},{"question":"3. The immediate impact on aggregate spending in the economy would be invariant between the government matching its deficit spending with private bond issues and the situation where the government instructed the central bank to buy its bonds to match the deficit.","ID":"1878","explanation":"","answers":[{"ID":"9475","answer":"False","correct":"0"},{"ID":"9474","answer":"True","correct":"1"}]}]}, {"ID":"490","name":"Quiz 2018 - 32","added_on":"2018-08-09 06:45:34","questions":[{"question":"1. Which scenario represents a more expansionary outcome:n(a) A fiscal deficit equivalent to 5 per cent of GDP (including the impact of automatic stabilisers equivalent to 2 per cent of GDP).n(b) A fiscal deficit equivalent to 4 per cent of GDP (where the automatic stabiliser component is zero).n(c) A fiscal deficit of 2 per cent.n(d) You cannot tell because you do not know the decomposition between the cyclical and structural components in Option (c)","ID":"1879","explanation":"","answers":[{"ID":"9493","answer":"Option (d)","correct":"0"},{"ID":"9492","answer":"Option (c)","correct":"0"},{"ID":"9491","answer":"Option (b)","correct":"0"},{"ID":"9490","answer":"Option (a)","correct":"1"}]},{"question":"2. When the government matches an increase in its deficit spending with debt issued to the non-government sector, the immediate stimulus to aggregate expenditure is less than would be the case if the government didn"t borrow at all.","ID":"1880","explanation":"","answers":[{"ID":"9495","answer":"False","correct":"1"},{"ID":"9494","answer":"True","correct":"0"}]},{"question":"3. If the central bank required that banks have to hold reserves equivalent to their outstanding loans this would restrict lending.","ID":"1881","explanation":"","answers":[{"ID":"9489","answer":"False","correct":"1"},{"ID":"9488","answer":"True","correct":"0"}]}]}, {"ID":"491","name":"Quiz 2018 - 33","added_on":"2018-08-16 22:32:16","questions":[{"question":"1. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"1882","explanation":"","answers":[{"ID":"9506","answer":"A nation can run an external deficit and equal government surplus while the private domestic sector is saving overall.","correct":"0"},{"ID":"9507","answer":"A nation can run an external deficit and equal government surplus while the private domestic sector is dis-saving overall.","correct":"1"},{"ID":"9508","answer":"A nation can run an external deficit and a larger government surplus while the private domestic sector is saving overall.","correct":"0"},{"ID":"9509","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]},{"question":"2. The more funds that commercial banks have on account with the central bank the more they can lend out to customers.","ID":"1883","explanation":"","answers":[{"ID":"9503","answer":"False","correct":"1"},{"ID":"9502","answer":"True","correct":"0"}]},{"question":"3. Modern Monetary Theory (MMT) considers that the public debt ratio is of no concern because economic growth will always bring it down after a recession.","ID":"1884","explanation":"","answers":[{"ID":"9505","answer":"False","correct":"1"},{"ID":"9504","answer":"True","correct":"0"}]}]}, {"ID":"492","name":"Quiz 2018 - 34","added_on":"2018-08-23 06:51:04","questions":[{"question":"1. For the US private domestic sector to reduce its overall overall debt levels, the government must run a fiscal deficit.","ID":"1885","explanation":"","answers":[{"ID":"9517","answer":"False","correct":"1"},{"ID":"9516","answer":"True","correct":"0"}]},{"question":"2. Larger fiscal deficits as a percentage of GDP reduce the local productive resources that are available to the private domestic sector.","ID":"1886","explanation":"","answers":[{"ID":"9519","answer":"False","correct":"0"},{"ID":"9518","answer":"True","correct":"1"}]},{"question":"3. Assume the government increases spending by $100 billion from now and maintains that injection each year for three years. Economists estimate the spending multiplier to be 1.6 and the impact is immediate and exhausted in each year. They also estimate that the import propensity is 0.2 (meaning that imports rise by 20 cents for every dollar generated in the economy) and the current tax rate is equal to 20 per cent. They also estimate that the tax multiplier (impact of tax changes on income) to be equal to 1. The cumulative impact of this fiscal expansion on nominal GDP is:","ID":"1887","explanation":"","answers":[{"ID":"9527","answer":"$384 billion and households save 28 cents out of every extra disposable dollar generated.","correct":"0"},{"ID":"9526","answer":"$384 billion and households save 24 cents out of every extra disposable dollar generated.","correct":"0"},{"ID":"9525","answer":"$480 billion and households save 28 cents out of every extra disposable dollar generated.","correct":"1"},{"ID":"9524","answer":"$480 billion and households save 24 cents out of every extra disposable dollar generated.","correct":"0"}]}]}, {"ID":"493","name":"Quiz 2018 - 35","added_on":"2018-08-30 19:44:01","questions":[{"question":"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:","ID":"1888","explanation":"","answers":[{"ID":"9534","answer":"Deficit of 1 per cent of GDP","correct":"1"},{"ID":"9535","answer":"Surplus of 1 per cent of GDP","correct":"0"}]},{"question":"2. If the government uses its fiscal policy instruments to maintain trend real GDP growth it will also ensure full employment is sustained.","ID":"1889","explanation":"","answers":[{"ID":"9541","answer":"False","correct":"1"},{"ID":"9540","answer":"True","correct":"0"}]},{"question":"3. If the external sector is accumulating financial claims on the local economy (that is, providing foreign savings to the domestic economy) and the GDP growth rate is lower than the real interest rate, then the private domestic sector and the government sector can run surpluses without damaging employment growth.","ID":"1890","explanation":"","answers":[{"ID":"9539","answer":"False","correct":"1"},{"ID":"9538","answer":"True","correct":"0"}]}]}, {"ID":"494","name":"Quiz 2018 - 36","added_on":"2018-09-06 20:12:59","questions":[{"question":"1. If yields rise on new bond issues then deficit spending by a currency-issuing government becomes more expensive.","ID":"1891","explanation":"","answers":[{"ID":"9549","answer":"False","correct":"1"},{"ID":"9548","answer":"True","correct":"0"}]},{"question":"2. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the domestic private sector cannot reduce its overall debt levels (by overall saving) without incurring employment losses and pushing the public deficit higher and the external deficit lower.","ID":"1892","explanation":"","answers":[{"ID":"9551","answer":"False","correct":"0"},{"ID":"9550","answer":"True","correct":"1"}]},{"question":"3. The imposition of fiscal rules which aim to limit the discretionary capacity of governments to net spend bias fiscal policy towards counter-cyclical responses when private spending is weak.","ID":"1893","explanation":"","answers":[{"ID":"9553","answer":"False","correct":"1"},{"ID":"9552","answer":"True","correct":"0"}]}]}, {"ID":"495","name":"Quiz 2018 - 37","added_on":"2018-09-13 06:57:13","questions":[{"question":"1. The IMF use their estimates of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) to calibrate their structural deficit estimates. Accordingly, the structural deficits will typically be:","ID":"1894","explanation":"","answers":[{"ID":"9571","answer":"difficult to assess because their forecasts are highly inaccurate","correct":"0"},{"ID":"9569","answer":"biased downwards.","correct":"0"},{"ID":"9570","answer":"biased upwards.","correct":"1"}]},{"question":"2. Under a fiat monetary system, the absence of currency convertibility means that:","ID":"1895","explanation":"","answers":[{"ID":"9586","answer":"the currency is only convertible into government bonds rather than gold.","correct":"0"},{"ID":"9585","answer":"government can induce us to offer goods and services in return for public spending by fining us for walking down streets.","correct":"1"},{"ID":"9584","answer":"there is no reason for people to hold currency as a hedge against gold price falls.","correct":"0"}]},{"question":"3. Only one of the following statements can be true when you observe rising government bond yields for new issues:","ID":"1896","explanation":"","answers":[{"ID":"9560","answer":"Government spending is becoming more expensive.","correct":"0"},{"ID":"9561","answer":"Bond prices are falling in response to demand.","correct":"1"},{"ID":"9562","answer":"Government spending is increasing the cost of borrowing for private investors.","correct":"0"}]}]}, {"ID":"496","name":"Quiz 2018 - 38","added_on":"2018-09-20 06:50:12","questions":[{"question":"1. If there is more \\\"money\\\" in the economy its value inevitably declines.","ID":"1897","explanation":"","answers":[{"ID":"9596","answer":"False","correct":"1"},{"ID":"9595","answer":"True","correct":"0"}]},{"question":"2. If there was a fiscal rule imposed such that the national government had to match its expenditure and taxation revenue at all times then this would also eliminate the sensitivity of the fiscal outcome to the automatic stabilisers.","ID":"1898","explanation":"","answers":[{"ID":"9598","answer":"False","correct":"1"},{"ID":"9597","answer":"True","correct":"0"}]},{"question":"3. Consumption adds to aggregate demand and imports drain aggregate demand. The marginal propensity to consume (MPC) is conceptually the extra consumption that is induced for every extra dollar of national income. The marginal propensity to import (MPM) is similarly the extra spending on imports that is induced for every extra dollar of national income. If the MPC and MPM both rise by 0.1, then the impact on aggregate demand for every new dollar of national income generated will be neutral.","ID":"1899","explanation":"","answers":[{"ID":"9600","answer":"False","correct":"1"},{"ID":"9599","answer":"True","correct":"0"}]}]}, {"ID":"497","name":"Quiz 2018 - 39","added_on":"2018-09-25 07:52:48","questions":[{"question":"1. In the wake of a rising household saving ratio, a nation with an external deficit will enter recession unless government net spending increases.","ID":"1900","explanation":"","answers":[{"ID":"9616","answer":"False","correct":"1"},{"ID":"9615","answer":"True","correct":"0"}]},{"question":"2. If an economy is projected to grow in real terms by around 2.1 per cent over the next 12 months. Real GDP per employed person is estimated to grow by 1.1 per cent over the same period and there is also the expectation that average weekly hours worked will remain more or less constant over the period. Which of the following labour force growth rates would provide the basis for an expectation that the unemployment rate will be lower at the end of period than at the beginning?","ID":"1901","explanation":"","answers":[{"ID":"9612","answer":"2.1","correct":"0"},{"ID":"9611","answer":"3.2","correct":"0"},{"ID":"9613","answer":"0.9","correct":"1"},{"ID":"9614","answer":"Cannot tell because we don"t know what the participation rate is likely to be.","correct":"0"}]},{"question":"3. Economists use two multipliers to estimate the impact on GDP of an expansion in government spending associated with rising tax rates. The spending multiplier indicates the extent to which GDP rises as a result of the extra aggregate spending arising from the increased government spending. The tax multiplier indicates the impact of rising tax rates on GDP as labour supply is reduced because of the disincentives associated with taxation. The net effect on GDP is the sum of these two impacts. Assume that the government increases spending by $100 billion at the start of each year and maintains this policy for the next three years from now. Economists estimate the spending multiplier to be 1.5 and the impact is exhausted within each year (all induced consumption is completed within 12 months). The tax multiplier is estimated to be equal to 1 and the current tax rate is equal to 30 per cent (so tax revenue rises by 30 cents for every extra dollar of GDP produced ). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"1902","explanation":"","answers":[{"ID":"9607","answer":"$135 billionnnn","correct":"0"},{"ID":"9608","answer":"$150 billion","correct":"0"},{"ID":"9609","answer":"$315 billion","correct":"0"},{"ID":"9610","answer":"$450 billion","correct":"1"}]}]}, {"ID":"498","name":"Quiz 2018 - 40","added_on":"2018-10-04 07:32:57","questions":[{"question":"1. The ECB has announced that it will taper its quantitative easing over the next few months. The steady decline in purchases of government bonds from the non-government sector will reduce the growth of net financial assets in that sector.","ID":"1903","explanation":"","answers":[{"ID":"9624","answer":"False","correct":"1"},{"ID":"9623","answer":"True","correct":"0"}]},{"question":"2. The immediate change in the net worth of the non-government sector when the government increases its net spending is invariant to government issuing debt which exactly matches ($-for-$) the increase in net public spending.n","ID":"1904","explanation":"","answers":[{"ID":"9628","answer":"False","correct":"0"},{"ID":"9627","answer":"True","correct":"1"}]},{"question":"3. A rising government deficit will always allow the private domestic sector to increase its overall saving in nominal terms.","ID":"1905","explanation":"","answers":[{"ID":"9630","answer":"False","correct":"1"},{"ID":"9629","answer":"True","correct":"0"}]}]}, {"ID":"499","name":"Quiz 2018 - 41","added_on":"2018-10-09 16:37:57","questions":[{"question":"1. Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting. In this situation, if government spending increases by $X dollars and private investment and exports are unchanged nominal income will continue growing until the sum of taxation revenue, import spending and household saving rises by more than $X dollars because of the multiplier.","ID":"1906","explanation":"","answers":[{"ID":"9638","answer":"False","correct":"1"},{"ID":"9637","answer":"True","correct":"0"}]},{"question":"2. When a government such as the US government voluntarily constrains itself to borrow to cover its net spending position, it substitutes its spending for the borrowed funds and logically reduces the private capacity to borrow and spend.","ID":"1907","explanation":"","answers":[{"ID":"9644","answer":"False","correct":"1"},{"ID":"9643","answer":"True","correct":"0"}]},{"question":"3. When the national government"s budget balance moves into deficit, we know that the government is trying to stimulate the economy.","ID":"1908","explanation":"","answers":[{"ID":"9642","answer":"False","correct":"1"},{"ID":"9641","answer":"True","correct":"0"}]}]}, {"ID":"500","name":"Quiz 2018 - 41","added_on":"2018-10-18 18:38:28","questions":[{"question":"1. The mainstream the Quantity Theory of Money claims that growth in the stock of money will be inflationary. The fact that the recent practice of large-scale quantitative easing (so-called printing money) in many nations has not generated any inflationary impulses is evidence that this "Theory" is flawed.","ID":"1909","explanation":"","answers":[{"ID":"9652","answer":"False","correct":"1"},{"ID":"9651","answer":"True","correct":"0"}]},{"question":"2. Bank lending is capital-constrained rather than reserve constrained. If the central bank forced banks to maintain a reserve ratio of 100 per cent then lending would also be reserve constrained.","ID":"1910","explanation":"","answers":[{"ID":"9654","answer":"False","correct":"1"},{"ID":"9653","answer":"True","correct":"0"}]},{"question":"3. The fact that a sovereign government is never financially constrained means that they can always provide first-class health care even with rising dependency ratios associated with population ageing.","ID":"1911","explanation":"","answers":[{"ID":"9656","answer":"False","correct":"1"},{"ID":"9655","answer":"True","correct":"0"}]}]}, {"ID":"501","name":"Quiz 2018 - 42","added_on":"2018-10-25 16:56:10","questions":[{"question":"1. Choose the correct response (all balances expressed as a per cent of GDP):nn(a) A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.nn(b) A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.nn(c) A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.nn(d) None of the above are possible as they all defy the sectoral balances accounting identity. ","ID":"1912","explanation":"","answers":[{"ID":"9674","answer":"Option (c)","correct":"0"},{"ID":"9675","answer":"Option (d)","correct":"0"},{"ID":"9672","answer":"Option (a)","correct":"0"},{"ID":"9673","answer":"Option (b)","correct":"1"}]},{"question":"2. For workers to regain a larger share of national income, nominal wages have to grow faster than inflation - that is, the real wage has to rise.","ID":"1913","explanation":"","answers":[{"ID":"9671","answer":"False","correct":"1"},{"ID":"9670","answer":"True","correct":"0"}]},{"question":"3. Economists use rules of thumb to make estimates of the future direction of key aggregates based upon assumptions about the movement in related aggregates. Say, we form the view that over the next year: (a) the average working week will be constant in hours; (b) real GDP growth rate will be 3 per cent; (c) output per unit of labour input (persons) grows at 1.5 per cent; and (d) the labour force maintains a growth rate of 1.5 per cent per annum. We would project that the:","ID":"1914","explanation":"","answers":[{"ID":"9667","answer":"Unemployment rate will rise in the coming year by 1.5 per cent.","correct":"0"},{"ID":"9668","answer":"Unemployment rate will fall in the coming year by 1.5 per cent.","correct":"0"},{"ID":"9669","answer":"The unemployment rate will be unchanged.","correct":"1"}]}]}, {"ID":"502","name":"Quiz 2018 - 43","added_on":"2018-11-01 20:18:47","questions":[{"question":"1. Nations with external deficits operate within the constraint that national income movements will ensure that the two remaining sectors (government and private domestic) will spend more than they receive, irrespective of the GDP growth rate.","ID":"1915","explanation":"","answers":[{"ID":"9689","answer":"False","correct":"1"},{"ID":"9688","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) makes a crucial distinction between the issuer of the currency and the user of that currency. Unlike a household, which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"1916","explanation":"","answers":[{"ID":"9685","answer":"False","correct":"1"},{"ID":"9684","answer":"True","correct":"0"}]},{"question":"3. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.","ID":"1917","explanation":"","answers":[{"ID":"9687","answer":"False","correct":"1"},{"ID":"9686","answer":"True","correct":"0"}]}]}, {"ID":"503","name":"Quiz 2018 - 44","added_on":"2018-11-08 18:48:16","questions":[{"question":"1. Government spending which is not accompanied by a bond sale to the non-government sector immediately adds more to total spending than would be the case if there was a bond sale.","ID":"1918","explanation":"","answers":[{"ID":"9697","answer":"False","correct":"1"},{"ID":"9696","answer":"True","correct":"0"}]},{"question":"2. If the external balance is always in surplus, then the government can safely run a surplus and not impede economic growth.","ID":"1919","explanation":"","answers":[{"ID":"9699","answer":"False","correct":"1"},{"ID":"9698","answer":"True","correct":"0"}]},{"question":"3. Assume the government increases spending by $100 billion in the each of the next three years from now. Economists estimate the expenditure multiplier to be 1.5 and the impact is immediate and exhausted in each year. They also estimate the tax multiplier to be equal to 1 and the current tax rate is equal to 30 per cent (30 cents in the $). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"1920","explanation":"","answers":[{"ID":"9700","answer":"$135 billion","correct":"0"},{"ID":"9701","answer":"$150 billion","correct":"0"},{"ID":"9702","answer":"$315 billion","correct":"0"},{"ID":"9703","answer":"$450 billion","correct":"1"}]}]}, {"ID":"504","name":"Quiz 2018 - 45","added_on":"2018-11-15 19:09:23","questions":[{"question":"1. Imagine that macroeconomic policy is geared towards keeping real GDP growth on trend. Assume this rate of growth is 3 per cent per annum. If labour productivity is growing at 2 per cent per annum and the labour force is growing at 1.5 per cent per annum and the average working week is constant in hours, then this policy regime will result in:","ID":"1921","explanation":"","answers":[{"ID":"9714","answer":"a declining unemployment rate.","correct":"0"},{"ID":"9715","answer":"an unchanged unemployment rate.","correct":"0"},{"ID":"9716","answer":"a rising unemployment rate.","correct":"1"}]},{"question":"2. Students are taught that the macroeconomic income determination system can be thought of as a bath tub with the current GDP being the water level. The drain plug can be thought of as saving, imports and taxation payments (the so-called leakages from the expenditure system) while the taps can be thought of as investment, government spending and exports (the so-called exogenous injections into the spending system). This analogy is valid because GDP will be unchanged as long as the flows into the bath are equal to the flows out of it which is tantamount to saying the the spending gap left by the leakages is always filled by the injections.","ID":"1922","explanation":"","answers":[{"ID":"9713","answer":"False","correct":"1"},{"ID":"9712","answer":"True","correct":"0"}]},{"question":"3. Assume the current public debt to GDP ratio is 100 per cent and that the nominal interest rate and the inflation rate remain constant and zero. Under these circumstances it is impossible to reduce a public debt to GDP ratio, using an austerity package if the rise in the primary fiscal surplus to GDP ratio is always exactly offset by negative GDP growth rate of the same percentage value.","ID":"1923","explanation":"","answers":[{"ID":"9718","answer":"False","correct":"0"},{"ID":"9717","answer":"True","correct":"1"}]}]}, {"ID":"505","name":"Quiz 2018 - 46","added_on":"2018-11-22 02:42:44","questions":[{"question":"1. A fiscal deficit that is equivalent to 5 per cent of GDP always signals a more expansionary fiscal intent from government than a fiscal deficit outcome that is equivalent to 3 per cent of GDP.","ID":"1924","explanation":"","answers":[{"ID":"9728","answer":"False","correct":"1"},{"ID":"9727","answer":"True","correct":"0"}]},{"question":"2. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory (MMT) tells us that the government must increase net spending to fill the spending gap or else national output and income will fall.","ID":"1925","explanation":"","answers":[{"ID":"9726","answer":"False","correct":"1"},{"ID":"9725","answer":"True","correct":"0"}]},{"question":"3. While the EMU nations cannot use the exchange rate mechanism to adjust for trading imbalances arising from a lack of competitiveness, they will improve their competitive position by reducing their domestic wage and price levels (the so-called internal devaluation).nn","ID":"1926","explanation":"","answers":[{"ID":"9730","answer":"False","correct":"1"},{"ID":"9729","answer":"True","correct":"0"}]}]}, {"ID":"506","name":"Quiz 2018 - 47","added_on":"2018-11-29 19:44:15","questions":[{"question":"1. From the US National Accounts, you find that in 2006, the share of Personal consumption expenditure in real GDP was 69.9 per cent and by 2008 it had fallen to 69.8 per cent. Similarly, the share of Gross private domestic investment on real GDP was 17.2 per cent in 2006 and by 2008 had fallen to 14.9 per cent (and further to 11.8 per cent in 2009). The net export deficit over the same period (2006 to 2008) fell from -5.7 per cent of real GDP to -4.9 per cent in 2008. Finally, the share of Government consumption expenditures and gross investment in real GDP rose from 18.8 per cent in 2006 to 18.9 per cent in 2008 (and 19.7 per cent in 2009). These relative changes tell you that real GDP was lower in 2008 compared to 2006 because the increase in Government spending and the falling negative contribution of net exports were not sufficient to offset the declining contribution from consumption and investment.","ID":"1927","explanation":"","answers":[{"ID":"9738","answer":"False","correct":"1"},{"ID":"9737","answer":"True","correct":"0"}]},{"question":"2. The solvency risk facing Eurozone nations such as Italy at present is sourced in the restrictions imposed on fiscal deficit and debt ratios by the Stability and Growth Pact and the Fiscal Compact, which member states voluntarily agreed to when they entered into as part of their membership of the common currency.","ID":"1928","explanation":"","answers":[{"ID":"9745","answer":"False","correct":"1"},{"ID":"9744","answer":"True","correct":"0"}]},{"question":"3. Take the following situation reported in a nation"s Labour Force data. Employment grew by only 400 in net terms in the previous month. Other highlights were that unemployment rose by 10,700 and that the labour force participation rate fell by 0.1 per cent. Taken together this data tells you that:nnnn","ID":"1929","explanation":"","answers":[{"ID":"9748","answer":"The labour force grew faster than employment but you cannot tell what happened to the working age population from the information provided.","correct":"0"},{"ID":"9746","answer":"The labour force grew faster than employment but not as fast the working age population.","correct":"1"},{"ID":"9747","answer":"The working age population grew faster than employment and offset the decline in the labour force arising from the drop in the participation rate.","correct":"0"}]}]}, {"ID":"507","name":"Quiz 2018 - 48","added_on":"2018-12-06 19:52:11","questions":[{"question":"1. An application of Modern Monetary Theory (MMT) tells us that the current proposals for a Green New Deal in the US and elsewhere will lead to crowding out of other investment.","ID":"1930","explanation":"","answers":[{"ID":"9768","answer":"False","correct":"0"},{"ID":"9767","answer":"True","correct":"1"}]},{"question":"2. A rising government deficit will always allow the private domestic sector to increase its saving in nominal terms.","ID":"1931","explanation":"","answers":[{"ID":"9764","answer":"False","correct":"1"},{"ID":"9763","answer":"True","correct":"0"}]},{"question":"3. A lack of a close correspondence between the growth of bank reserves and the growth in the stock of money is evidence that credit creation is being tightly constrained.","ID":"1932","explanation":"","answers":[{"ID":"9766","answer":"False","correct":"0"},{"ID":"9765","answer":"True","correct":"1"}]}]}, {"ID":"508","name":"Quiz 2018 - 49","added_on":"2018-12-13 19:56:34","questions":[{"question":"1. A national government can run a balanced fiscal position (taxes equal spending) over the economic cycle (peak to peak) as long as it accepts that, after all the spending adjustments are exhausted, their strategy will ensure that households and firms overall spend more than they earn - that is, run down previous savings or accumulate more net debt.","ID":"1933","explanation":"","answers":[{"ID":"9776","answer":"False","correct":"1"},{"ID":"9775","answer":"True","correct":"0"}]},{"question":"2. A basic understanding of Modern Monetary Theory (MMT) would argue that mass unemployment is due to a deficiency in aggregate demand which would then lead one to reject the conclusion that excessive real wage demands by workers can cause such unemployment.","ID":"1934","explanation":"","answers":[{"ID":"9778","answer":"False","correct":"1"},{"ID":"9777","answer":"True","correct":"0"}]},{"question":"3. A fiscal surplus indicates that the national government is:","ID":"1935","explanation":"","answers":[{"ID":"9779","answer":"Trying to slow the economy down to contain inflation.","correct":"0"},{"ID":"9780","answer":"Trying to reduce public debt.","correct":"0"},{"ID":"9781","answer":"You cannot conclude anything about the government"s policy intentions.","correct":"1"}]}]}, {"ID":"509","name":"Quiz 2018 - 50","added_on":"2018-12-20 05:03:20","questions":[{"question":"1. Higher levels of taxation permit the government to spend more.","ID":"1936","explanation":"","answers":[{"ID":"9789","answer":"False","correct":"0"},{"ID":"9788","answer":"True","correct":"1"}]},{"question":"2. For nations facing strong terms of trade (such as Australia), if the net exports boom is strong enough to push the fiscal balance into surplus and the economy to full employment then it is sensible for the government to accumulate the surpluses in a sovereign fund to create more space for non-inflationary spending in the future.","ID":"1937","explanation":"","answers":[{"ID":"9795","answer":"False","correct":"1"},{"ID":"9794","answer":"True","correct":"0"}]},{"question":"3. The reason estimates of structural fiscal deficits are to be treated with suspicion relates to the fact that typically the associated estimates of potential GDP are too optimistic.","ID":"1938","explanation":"","answers":[{"ID":"9797","answer":"False","correct":"1"},{"ID":"9796","answer":"True","correct":"0"}]}]}, {"ID":"510","name":"Quiz 2018 - 51","added_on":"2018-12-27 19:15:35","questions":[{"question":"1. In general, the estimates provided by the organisations such as the OECD and IMF of the impact of the automatic stabilisers are biased upwards.","ID":"1939","explanation":"","answers":[{"ID":"9807","answer":"False","correct":"1"},{"ID":"9806","answer":"True","correct":"0"}]},{"question":"2. If there is an external deficit, efforts by the private domestic sector to increase its overall saving as a percentage of GDP to even higher levels, will ensure the government fiscal balance is in deficit, irrespective of what the government desires.","ID":"1940","explanation":"","answers":[{"ID":"9813","answer":"False","correct":"0"},{"ID":"9812","answer":"True","correct":"1"}]},{"question":"3. When a government runs a continuous fiscal deficit, public spending builds up over time.","ID":"1941","explanation":"","answers":[{"ID":"9811","answer":"False","correct":"1"},{"ID":"9810","answer":"True","correct":"0"}]}]}, {"ID":"511","name":"Quiz 2019 - 1","added_on":"2019-01-03 19:06:38","questions":[{"question":"1. If inflation rate remained equal to the nominal interest rate, then the government primary deficit could double (from say 2 to 4 per cent of GDP) without pushing up public debt as a proportion of GDP.","ID":"1942","explanation":"","answers":[{"ID":"9827","answer":"False","correct":"0"},{"ID":"9826","answer":"True ","correct":"1"}]},{"question":"2. If the share of wages in national income falls then the workers" material standard of living also falls.","ID":"1943","explanation":"","answers":[{"ID":"9823","answer":"False","correct":"1"},{"ID":"9822","answer":"True","correct":"0"}]},{"question":"3. Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current interest rate target. If on average the government collects an income tax of 20 cents in the dollar, then total tax revenue will rise by 0.20 times $x if government spending increases (once and for all) by $x dollars and private investment and exports remain unchanged.","ID":"1944","explanation":"","answers":[{"ID":"9821","answer":"False","correct":"1"},{"ID":"9820","answer":"True","correct":"0"}]}]}, {"ID":"512","name":"Quiz 2019 - 2","added_on":"2019-01-10 01:37:03","questions":[{"question":"1. In a nation running an on-going external deficit, if the private domestic sector decides to increase the extent that it spends less than its overall income, then the national government has to increase its discretionary fiscal deficit in order to avoid rising employment losses.","ID":"1945","explanation":"","answers":[{"ID":"9828","answer":"True","correct":"1"},{"ID":"9829","answer":"False","correct":"0"}]},{"question":"2. The build-up of Chinese holdings of US government debt has allowed US citizens to enjoy a higher material standard of living at the expense of the residents of China.","ID":"1946","explanation":"","answers":[{"ID":"9830","answer":"True","correct":"1"},{"ID":"9831","answer":"False","correct":"0"}]},{"question":"3. Short-term interest rates are set by the central bank while the fiscal strategy manifests in tax and spending decisions by the government. Whereas the non-government sector cannot directly influence the interest rate target being set, it does, ultimately, determine the size of the fiscal deficit at any point in time.","ID":"1947","explanation":"","answers":[{"ID":"9832","answer":"True","correct":"1"},{"ID":"9833","answer":"False","correct":"0"}]}]}, {"ID":"513","name":"Quiz 2019 - 3","added_on":"2019-01-17 18:27:34","questions":[{"question":"1. If economy-wide average nominal wages fail to keep pace with the inflation rate then it means the owners of capital are enjoying an increasing share in GDP. ","ID":"1948","explanation":"","answers":[{"ID":"9834","answer":"True","correct":"0"},{"ID":"9835","answer":"False","correct":"1"}]},{"question":"2. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would always find:","ID":"1949","explanation":"","answers":[{"ID":"9836","answer":"Unable to determine because we don"t know the scale of the private domestic sector saving as a % of GDP.","correct":"0"},{"ID":"9837","answer":"A fiscal surplus","correct":"0"},{"ID":"9838","answer":"A fiscal deficit","correct":"1"}]},{"question":"3. Assume that the inflation and nominal interest rates both zero and constant. Consider a country with a public debt to GDP ratio of 100 per cent, which the mainstream economists consider to be dangerously high. The mainstream prescription is to run primary fiscal surpluses to stabilise and then reduce the debt ratio. Under the circumstances given, this strategy will only work if there is positive real GDP growth.","ID":"1950","explanation":"","answers":[{"ID":"9839","answer":"True","correct":"0"},{"ID":"9840","answer":"False","correct":"1"}]}]}, {"ID":"514","name":"Quiz 2019 - 4","added_on":"2019-01-24 16:36:19","questions":[{"question":"1. When a government such as the US government voluntarily constrains itself by issuing debt to match $-for-$ its net spending position (deficit), it reduces the funds available to the non-government sector for their own spending.","ID":"1951","explanation":"","answers":[{"ID":"9850","answer":"False","correct":"1"},{"ID":"9849","answer":"True","correct":"0"}]},{"question":"2. When the national government"s fiscal balance moves into surplus:nnnnn","ID":"1952","explanation":"","answers":[{"ID":"9851","answer":"It is a sign that the government is trying to constrain economic activity.","correct":"0"},{"ID":"9852","answer":"It is a sign that the government is worried that inflation is rising.","correct":"0"},{"ID":"9853","answer":"One cannot conclude anything about the government"s policy intentions.","correct":"1"},{"ID":"9854","answer":"Options (a) and (b).","correct":"0"}]},{"question":"3. If the external balance remains in surplus, then the national government can run a fiscal surplus without impeding economic growth.","ID":"1953","explanation":"","answers":[{"ID":"9848","answer":"False","correct":"0"},{"ID":"9847","answer":"True","correct":"1"}]}]}, {"ID":"515","name":"Quiz 2019 - 5","added_on":"2019-01-31 04:03:17","questions":[{"question":"1. A government can run a balanced fiscal position over a complete economic cycle (peak to peak) as long as it accepts, that after all the spending and income adjustments are exhausted, that over the same cycle, the private domestic balance will only be in surplus if the external balance is in surplus.","ID":"1954","explanation":"","answers":[{"ID":"9862","answer":"False","correct":"0"},{"ID":"9861","answer":"True","correct":"1"}]},{"question":"2. A basic understanding of Modern Monetary Theory (MMT) would leave you to conclude that excessive real wage demands by workers can cause unemployment.","ID":"1955","explanation":"","answers":[{"ID":"9864","answer":"False","correct":"0"},{"ID":"9863","answer":"True","correct":"1"}]},{"question":"3. Assume that a nation"s GDP growth is half a percentage point below its trend rate of growth of 3.5 per cent per annum and labour productivity grows at 1.5 per cent per annum. If average working week is constant in hours and the labour force grows at 2 per cent per annum, then we would observe a rising unemployment rate.","ID":"1956","explanation":"","answers":[{"ID":"9868","answer":"False","correct":"0"},{"ID":"9867","answer":"True","correct":"1"}]}]}, {"ID":"516","name":"Quiz 2019 - 6","added_on":"2019-02-07 19:47:31","questions":[{"question":"1. Workers can enjoy a stable share of GDP over time if they secure wage increases in line with the growth in their contribution to production.","ID":"1957","explanation":"","answers":[{"ID":"9880","answer":"False","correct":"1"},{"ID":"9879","answer":"True","correct":"0"}]},{"question":"2. In general, the estimates of the cyclical position of the fiscal balance provided by organisations such as OECD, the IMF and the US Congressional Budget Office are biased downwards.","ID":"1958","explanation":"","answers":[{"ID":"9878","answer":"False","correct":"0"},{"ID":"9877","answer":"True","correct":"1"}]},{"question":"3. A continuous fiscal deficit exposes the economy to inflation risk because the public spending builds up over time.","ID":"1959","explanation":"","answers":[{"ID":"9876","answer":"False","correct":"1"},{"ID":"9875","answer":"True","correct":"0"}]}]}, {"ID":"517","name":"Quiz 2019 - 7","added_on":"2019-02-14 04:26:08","questions":[{"question":"1. Which scenario represents a more expansionary outcome:n","ID":"1960","explanation":"","answers":[{"ID":"9910","answer":"Option (d)","correct":"0"},{"ID":"9909","answer":"Option (c)","correct":"1"},{"ID":"9908","answer":"Option (b)","correct":"0"},{"ID":"9907","answer":"Option (a)","correct":"0"}]},{"question":"2. If net exports are running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must be running a surplus equal to 1 per cent of GDP.","ID":"1961","explanation":"","answers":[{"ID":"9898","answer":"False","correct":"1"},{"ID":"9897","answer":"True","correct":"0"}]},{"question":"3. A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government surplus: ","ID":"1962","explanation":"","answers":[{"ID":"9893","answer":"Of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"9894","answer":"Of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"9895","answer":"That is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"9896","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]}]}, {"ID":"518","name":"Quiz 2019 - 8","added_on":"2019-02-21 21:32:27","questions":[{"question":"1. A Fiscal Risk index which measures the vulnerability of a nation to public debt default is never applicable to a national government which issues its own floating currency.","ID":"1963","explanation":"","answers":[{"ID":"9924","answer":"False","correct":"1"},{"ID":"9923","answer":"True","correct":"0"}]},{"question":"2. All voluntary legal constraints aside, the central bank cannot directly purchase treasury debt to facilitate the national governments fiscal deficit (that is, "monetise the deficit") if it targets a positive short-term policy rate.","ID":"1964","explanation":"","answers":[{"ID":"9922","answer":"False","correct":"1"},{"ID":"9921","answer":"True","correct":"0"}]},{"question":"3. If the household saving ratio rises and there is an external deficit, then Modern Monetary Theory tells us that the government must increase net spending to fill the resulting increase in the non-government spending gap or else national output and income will fall.","ID":"1965","explanation":"","answers":[{"ID":"9918","answer":"False","correct":"1"},{"ID":"9917","answer":"True","correct":"0"}]}]}, {"ID":"519","name":"Quiz 2019 - 9","added_on":"2019-02-28 04:07:10","questions":[{"question":"1. If the inflation rate is steady and the central bank maintains a constant nominal interest rate, then, under current institutional arrangements, the public debt ratio will always increase if the government deficit doubles (say, from 2 to 4 per cent of GDP) although Modern Monetary Theory would not place any special importance in that increase.","ID":"1966","explanation":"","answers":[{"ID":"9932","answer":"False","correct":"1"},{"ID":"9931","answer":"True","correct":"0"}]},{"question":"2. The real purchasing power of workers" wages rises when the rate of growth in nominal earnings is faster than the growth in labour productivity.","ID":"1967","explanation":"","answers":[{"ID":"9936","answer":"False","correct":"1"},{"ID":"9935","answer":"True","correct":"0"}]},{"question":"3. A fiscal surplus indicates that the national government is trying to slow the economy down and contain inflation.","ID":"1968","explanation":"","answers":[{"ID":"9938","answer":"False","correct":"1"},{"ID":"9937","answer":"True","correct":"0"}]}]}, {"ID":"520","name":"Quiz 2019 - 10","added_on":"2019-03-06 14:04:42","questions":[{"question":"1. A central bank can pay any rate on excess reserves to the commercial banks that it chooses independent of its other monetary policy settings.","ID":"1969","explanation":"","answers":[{"ID":"9946","answer":"False","correct":"1"},{"ID":"9945","answer":"True","correct":"0"}]},{"question":"2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"1970","explanation":"","answers":[{"ID":"9949","answer":"A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government surplus of equal proportion to GDP, while the private domestic sector is spending les","correct":"0"},{"ID":"9950","answer":"A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus of equal proportion to GDP, while the private domestic sector is spend","correct":"1"},{"ID":"9951","answer":"A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government sector surplus that is larger, while the private domestic sector is spending less tha","correct":"0"},{"ID":"9952","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]},{"question":"3. Modern Monetary Theory (MMT) demonstrates that mass unemployment arises from deficient aggregate demand which calls for an increase in the fiscal deficit to correct the deficiency. This observation is totally at odds with the mainstream view that unemployment can be reduced by cutting real wages relative to productivity.","ID":"1971","explanation":"","answers":[{"ID":"9956","answer":"False","correct":"1"},{"ID":"9955","answer":"True","correct":"0"}]}]}, {"ID":"521","name":"Quiz 2019 - 11","added_on":"2019-03-12 04:04:44","questions":[{"question":"1. The only way that unbalanced external accounts across nations (some countries with surpluses and other deficits) can exist is because the surplus countries desire to hold financial assets denominated in the currency of the deficit countries.","ID":"1972","explanation":"","answers":[{"ID":"9964","answer":"False","correct":"0"},{"ID":"9963","answer":"True","correct":"1"}]},{"question":"2. Like anything in abundance, it is true that when there is more \\\"money\\\" in the economy its value declines.","ID":"1973","explanation":"","answers":[{"ID":"9966","answer":"False","correct":"1"},{"ID":"9965","answer":"True","correct":"0"}]},{"question":"3. The imposition of a fiscal rule at the national government level that the fiscal position is required to be in balance at all times would eliminate fiscal swings driven by the automatic stabilisers.","ID":"1974","explanation":"","answers":[{"ID":"9968","answer":"False","correct":"1"},{"ID":"9967","answer":"True","correct":"0"}]}]}, {"ID":"522","name":"Quiz 2019 - 12","added_on":"2019-03-21 17:12:26","questions":[{"question":"1. Assume inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting. It is then true that if government spending increases by $X dollars and private investment and exports are unchanged then nominal income will continue growing until the sum of taxation revenue, import spending and household saving rises by $X dollars.","ID":"1975","explanation":"","answers":[{"ID":"9976","answer":"False","correct":"0"},{"ID":"9975","answer":"True","correct":"1"}]},{"question":"2. While a sovereign government is not revenue constrained and voluntarily constrains itself to borrow to cover its net spending position, it remains the case that by substituting its spending for the borrowed funds it reduces the private capacity to borrow and spend.","ID":"1976","explanation":"","answers":[{"ID":"9978","answer":"False","correct":"1"},{"ID":"9977","answer":"True","correct":"0"}]},{"question":"3. The crucial difference between a monetary system based on the gold standard world and a fiat currency monetary is, that under the former system:","ID":"1977","explanation":"","answers":[{"ID":"9979","answer":"excessive national government spending led to inflation.","correct":"0"},{"ID":"9980","answer":"the national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"9981","answer":"the national government could not use net spending to achieve full employment.","correct":"0"}]}]}, {"ID":"523","name":"Quiz 2019 - 13","added_on":"2019-03-28 20:30:13","questions":[{"question":"1. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.","ID":"1978","explanation":"","answers":[{"ID":"9982","answer":"True","correct":"1"},{"ID":"9983","answer":"False","correct":"0"}]},{"question":"2. For a nation running a current account deficit, income adjustments will ensure government fiscal position is in deficit if the domestic private sector seeks to increase its saving overall as a percentage of GDP.","ID":"1979","explanation":"","answers":[{"ID":"9984","answer":"True","correct":"1"},{"ID":"9985","answer":"False","correct":"0"}]},{"question":"3. Higher levels of taxation permit the government to increase its real spending.","ID":"1980","explanation":"","answers":[{"ID":"9986","answer":"True","correct":"1"},{"ID":"9987","answer":"False","correct":"0"}]}]}, {"ID":"524","name":"Quiz 2019 - 14","added_on":"2019-04-04 04:54:32","questions":[{"question":"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 reduce their overall respective net liabilities.","ID":"1981","explanation":"","answers":[{"ID":"10001","answer":"False","correct":"1"},{"ID":"10000","answer":"True","correct":"0"}]},{"question":"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 obligations but also has to repay them at the due date. ","ID":"1982","explanation":"","answers":[{"ID":"9995","answer":"False","correct":"1"},{"ID":"9994","answer":"True","correct":"0"}]},{"question":"3. The fact that large scale quantitative easing conducted by central banks in Japan in 2001 and now, more recently, in the UK and the USA 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.","ID":"1983","explanation":"","answers":[{"ID":"9997","answer":"False","correct":"1"},{"ID":"9996","answer":"True","correct":"0"}]}]}, {"ID":"525","name":"Quiz 2019 - 15","added_on":"2019-04-11 22:47:03","questions":[{"question":"1. The statement that lending is capital-constrained rather than reserve constrained would not apply if the banks had to maintain a reserve ratio of 100 per cent.","ID":"1984","explanation":"","answers":[{"ID":"10009","answer":"False","correct":"1"},{"ID":"10008","answer":"True","correct":"0"}]},{"question":"2. It is impossible for a government to run a public surplus without impairing growth because it is likely that the private domestic sector will desire to save overall.","ID":"1985","explanation":"","answers":[{"ID":"10011","answer":"False","correct":"1"},{"ID":"10010","answer":"True","correct":"0"}]},{"question":"3. A rising government deficit indicates an expansionary shift in policy and the challenge is to calibrate that expansion to ensure nominal demand growth does not exceed the real capacity of the economy to respond by increasing real output.","ID":"1986","explanation":"","answers":[{"ID":"10013","answer":"False","correct":"1"},{"ID":"10012","answer":"True","correct":"0"}]}]}, {"ID":"526","name":"Quiz 2019 - 16","added_on":"2019-04-18 21:06:55","questions":[{"question":"1. The public debt ratio will always fall when economic growth is positive because the primary deficit falls due to the automatic stabilisers (more tax revenue, less welfare spending) and the denominator GDP rises.","ID":"1987","explanation":"","answers":[{"ID":"10014","answer":"True","correct":"0"},{"ID":"10015","answer":"False","correct":"1"}]},{"question":"2. The automatic stabilisers work in a counter-cyclical fashion and ensure that the government fiscal balance returns to its appropriate level.","ID":"1988","explanation":"","answers":[{"ID":"10016","answer":"True","correct":"0"},{"ID":"10017","answer":"False","correct":"1"}]},{"question":"3. The monetary base always adjusts to the realised demand for credit by bank customers.","ID":"1989","explanation":"","answers":[{"ID":"10018","answer":"True","correct":"1"},{"ID":"10019","answer":"False","correct":"0"}]}]}, {"ID":"527","name":"Quiz 2019 - 17","added_on":"2019-04-25 23:26:29","questions":[{"question":"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:","ID":"1990","explanation":"","answers":[{"ID":"10026","answer":"biased downwards, indicating, that at any point in the business cycle, that the government fiscal stance is less expansionary than it actually is.","correct":"0"},{"ID":"10027","answer":"biased upwards, indicating, that at any point in the business cycle, that the government fiscal stance is more expansionary than it actually is.","correct":"1"},{"ID":"10028","answer":"difficult to assess because the Treasury forward estimates are subject to forecasting inaccuracy.","correct":"0"}]},{"question":"2. In a fiat monetary system, the absence of currency convertibility means:","ID":"1991","explanation":"","answers":[{"ID":"10029","answer":"there is no reason for people to hold currency as a hedge against gold price falls.","correct":"0"},{"ID":"10030","answer":"that the currency is only convertible into government bonds rather than gold.","correct":"0"},{"ID":"10031","answer":"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.n","correct":"1"}]},{"question":"3. When a sovereign government issues debt it logically:","ID":"1992","explanation":"","answers":[{"ID":"10032","answer":"increases the assets that are held by the non-government sector $-for-$.","correct":"0"},{"ID":"10033","answer":"has no impact on the overall holdings of assets held by the non-government sector $-for-$","correct":"1"},{"ID":"10034","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"}]}]}, {"ID":"528","name":"Quiz 2019 - 18","added_on":"2019-05-03 01:16:48","questions":[{"question":"1. Workers enjoy real wage increases when the rate of growth in earnings outstrips labour productivity growth.","ID":"1993","explanation":"","answers":[{"ID":"10048","answer":"False","correct":"1"},{"ID":"10047","answer":"True","correct":"0"}]},{"question":"2. Quantitative easing aims to stimulate aggregate spending by reducing long-term investment rates whereas fiscal deficit stimulate aggregate spending via tax cuts or direct public spending. Both policies ultimately work by increasing the net financial assets held by the non-government sector.","ID":"1994","explanation":"","answers":[{"ID":"10044","answer":"False","correct":"1"},{"ID":"10043","answer":"True","correct":"0"}]},{"question":"3. An understanding of Modern Monetary Theory (MMT) leads to the conclusion that a central bank could still increase interest rates even if the government instructed it to directly purchase treasury debt as an accompanying operation to the governments fiscal deficit.","ID":"1995","explanation":"","answers":[{"ID":"10046","answer":"False","correct":"0"},{"ID":"10045","answer":"True","correct":"1"}]}]}, {"ID":"529","name":"Quiz 2019 - 19","added_on":"2019-05-06 20:21:06","questions":[{"question":"1. In a fixed coupon government bond auction, the higher is the demand for the bonds:","ID":"1996","explanation":"","answers":[{"ID":"10065","answer":"the lower the yields will be at that asset maturity but this tells us nothing about the effect of fiscal deficits on short-term interest rates","correct":"1"},{"ID":"10064","answer":"the lower the yields will be at that asset maturity which suggests that higher fiscal deficits will eventually drive short-term interest rates down","correct":"0"},{"ID":"10063","answer":"the higher the yields will be at that asset maturity which suggests that higher fiscal deficits will eventually drive short-term interest rates down","correct":"0"}]},{"question":"2. When the government borrows from the non-government sector it eventually has to pay the bonds back on maturity. This will:","ID":"1997","explanation":"","answers":[{"ID":"10068","answer":"not be inflationary because the sovereign government just has to credit the bank accounts of those who hold the bonds to repay them.","correct":"0"},{"ID":"10067","answer":"be inflationary if the government payments to bond holders at maturity add more to nominal aggregate demand than the real economy can support given other policy settings.","correct":"1"},{"ID":"10066","answer":"be inflationary if by the time the bonds mature the economy is growing strongly so there will be too much money floating about.","correct":"0"}]},{"question":"3. When an external deficit and public deficit coincide, there must be a private sector deficit, which means that governments can only really run fiscal deficits to support a private sector surplus, when net exports are strong.","ID":"1998","explanation":"","answers":[{"ID":"10070","answer":"False","correct":"1"},{"ID":"10069","answer":"True","correct":"0"}]}]}, {"ID":"530","name":"Quiz 2019 - 20","added_on":"2019-05-16 23:11:42","questions":[{"question":"1. Government spending which is accompanied by a bond sale to the private sector adds less to aggregate spending on day 1 than would be the case if there was no bond sale.","ID":"1999","explanation":"","answers":[{"ID":"10078","answer":"False","correct":"1"},{"ID":"10077","answer":"True","correct":"0"}]},{"question":"2. Assume the government increases spending by $100 billion in year 1, again in year 2 and again in year 3. Economists estimate the spending multiplier to be 1.5 and the impact is immediate and exhausted in each year. They also estimate the tax multiplier to be equal to 1 and the current tax rate is equal to 30 per cent (30 cents in the $). What is the cumulative impact of this fiscal expansion on GDP after three years?n","ID":"2000","explanation":"","answers":[{"ID":"10088","answer":"$450 billion","correct":"1"},{"ID":"10087","answer":"$315 billion","correct":"0"},{"ID":"10086","answer":"$150 billion","correct":"0"},{"ID":"10085","answer":"$135 billion","correct":"0"}]},{"question":"3. In a stock-flow consistent macroeconomics, we have to always trace the impact of flows during a period on the relevant stocks at the end of the period. Accordingly, government and private investment spending are two examples of flows that adds to the stock of aggregate spending which in turn impacts on GDP.","ID":"2001","explanation":"","answers":[{"ID":"10084","answer":"False","correct":"1"},{"ID":"10083","answer":"True","correct":"0"}]}]}, {"ID":"531","name":"Quiz 2019 - 21","added_on":"2019-05-23 07:06:27","questions":[{"question":"1. As long as employment growth keeps pace with labour force growth, unemployment will not rise.","ID":"2002","explanation":"","answers":[{"ID":"10096","answer":"False","correct":"1"},{"ID":"10095","answer":"True","correct":"0"}]},{"question":"2. The non-government sector is immediately wealthier if the government matches it deficit with new debt issues compared to a situation where no debt was issued.","ID":"2003","explanation":"","answers":[{"ID":"10098","answer":"False","correct":"1"},{"ID":"10097","answer":"True","correct":"0"}]},{"question":"3. If net exports are running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must be running:","ID":"2004","explanation":"","answers":[{"ID":"10099","answer":"A surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"10100","answer":"A surplus equal to 5 per cent of GDP.","correct":"0"},{"ID":"10101","answer":"A deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"10102","answer":"A deficit equal to 5 per cent of GDP.","correct":"0"}]}]}, {"ID":"532","name":"Quiz 2019 - 22","added_on":"2019-05-30 21:32:32","questions":[{"question":"1. The private domestic sector can save overall even if the government fiscal balance is in surplus as long as net exports are positive.","ID":"2005","explanation":"","answers":[{"ID":"10110","answer":"False","correct":"1"},{"ID":"10109","answer":"True","correct":"0"}]},{"question":"2. Central bankers are talking about the possible need for more quantitative easing (QE) as their economies start to slow down. By adding bank reserves, QE is similar to a net fiscal injection in this respect.","ID":"2006","explanation":"","answers":[{"ID":"10112","answer":"False","correct":"1"},{"ID":"10111","answer":"True","correct":"0"}]},{"question":"3. While continuous national governments deficits are recommended if the non-government sector desires to save, they do imply continuously rising public debt levels as a percentage of GDP under current institutional arrangements.","ID":"2007","explanation":"","answers":[{"ID":"10114","answer":"False","correct":"1"},{"ID":"10113","answer":"True","correct":"0"}]}]}, {"ID":"533","name":"Quiz 2019 - 23","added_on":"2019-06-06 22:01:22","questions":[{"question":"1. The only way that you can have unbalanced external accounts across nations (some countries with surpluses and other deficits) is because the surplus countries desire to hold financial assets denominated in the currency of the deficit countries.","ID":"2008","explanation":"","answers":[{"ID":"10122","answer":"False","correct":"0"},{"ID":"10121","answer":"True","correct":"1"}]},{"question":"2. Like anything in abundance, it is true that when there is more \\\"money\\\" in the economy its value declines.","ID":"2009","explanation":"","answers":[{"ID":"10124","answer":"False","correct":"1"},{"ID":"10123","answer":"True","correct":"0"}]},{"question":"3. The imposition of a fiscal rule at the national government level that the fiscal account has to be in balance at all times would eliminate fiscal balance swings driven by the automatic stabilisers.","ID":"2010","explanation":"","answers":[{"ID":"10126","answer":"False","correct":"1"},{"ID":"10125","answer":"True","correct":"0"}]}]}, {"ID":"534","name":"Quiz 2019 - 24","added_on":"2019-06-13 22:47:25","questions":[{"question":"1. Bank reserves are maintained to ensure that all the cheques written every day clear when presented. If a bank doesn"t have enough reserves then cheques drawn against it will bounce.","ID":"2011","explanation":"","answers":[{"ID":"10134","answer":"False","correct":"1"},{"ID":"10133","answer":"True","correct":"0"}]},{"question":"2. The crucial difference between a monetary system based on the gold standard world and a fiat currency monetary is that under the former system:","ID":"2012","explanation":"","answers":[{"ID":"10135","answer":"excessive national government spending led to inflation.","correct":"0"},{"ID":"10136","answer":"the national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"10137","answer":"the national government could not use net spending to achieve full employment.","correct":"0"}]},{"question":"3. When the national government"s fiscal balance moves into deficit:","ID":"2013","explanation":"","answers":[{"ID":"10145","answer":"One cannot conclude anything about the government"s policy intentions.","correct":"1"},{"ID":"10144","answer":"(a) and (b)","correct":"0"},{"ID":"10143","answer":"It is a sign that the government is worried that unemployment is rising.","correct":"0"},{"ID":"10142","answer":"It is a sign that the government is trying to stimulate the economy.","correct":"0"}]}]}, {"ID":"535","name":"Quiz 2019 - 25","added_on":"2019-06-20 07:40:55","questions":[{"question":"1. Modern Monetary Theory tells us that a sovereign national government can run deficits without issuing debt. But the debt issuance allows the government to drain demand (private spending capacity) so that the public spending has more non-inflationary room to work within.","ID":"2014","explanation":"","answers":[{"ID":"10153","answer":"False","correct":"1"},{"ID":"10152","answer":"True","correct":"0"}]},{"question":"2. Workers enjoy a stable share of GDP over time if they secure wage increases in line with labour productivity.","ID":"2015","explanation":"","answers":[{"ID":"10155","answer":"False","correct":"1"},{"ID":"10154","answer":"True","correct":"0"}]},{"question":"3. The ratio of the \\\"stock of money\\\" (currency plus demand deposits) to bank reserves fell dramatically in the US in 2008 and been variable since that time. This phenomenon is best explained by a variable money multiplier.","ID":"2016","explanation":"","answers":[{"ID":"10159","answer":"False","correct":"1"},{"ID":"10158","answer":"True","correct":"0"}]}]}, {"ID":"536","name":"Quiz 2019 - 26","added_on":"2019-06-27 22:58:52","questions":[{"question":"1. The private domestic sector will save overall even if the government fiscal balance is in surplus as long as net exports are positive.","ID":"2017","explanation":"","answers":[{"ID":"10167","answer":"False","correct":"1"},{"ID":"10166","answer":"True","correct":"0"}]},{"question":"2. The difference between quantitative easing and an increasing fiscal deficit is that the former creates no new net financial assets in the currency of issue.","ID":"2018","explanation":"","answers":[{"ID":"10169","answer":"False","correct":"0"},{"ID":"10168","answer":"True","correct":"1"}]},{"question":"3. A fiscal deficit that is equivalent to 5 per cent of GDP always signals a more expansionary fiscal intent from government than a deficit outcome that is equivalent to 3 per cent of GDP. ","ID":"2019","explanation":"","answers":[{"ID":"10173","answer":"False","correct":"1"},{"ID":"10172","answer":"True","correct":"0"}]}]}, {"ID":"537","name":"Quiz 2019 - 27","added_on":"2019-07-04 23:07:35","questions":[{"question":"1. Mainstream economists use the notion of \\\"crowding out\\\" to argue that public spending squeezes out private spending and results in a less efficient allocation of resources overall. Modern Monetary Theory (MMT) denies that crowding out can occur.","ID":"2020","explanation":"","answers":[{"ID":"10181","answer":"False","correct":"1"},{"ID":"10180","answer":"True","correct":"0"}]},{"question":"2. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.","ID":"2021","explanation":"","answers":[{"ID":"10185","answer":"False","correct":"0"},{"ID":"10184","answer":"True","correct":"1"}]},{"question":"3. For a nation running a current account deficit, income adjustments will ensure government fiscal position is in deficit if the domestic private sector successfully increases its overall saving as a percentage of GDP.","ID":"2022","explanation":"","answers":[{"ID":"10187","answer":"False","correct":"0"},{"ID":"10186","answer":"True","correct":"1"}]}]}, {"ID":"538","name":"Quiz 2019 - 28","added_on":"2019-07-11 21:36:06","questions":[{"question":"1. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"2023","explanation":"","answers":[{"ID":"10195","answer":"False","correct":"1"},{"ID":"10194","answer":"True","correct":"0"}]},{"question":"2. Even though the money multiplier found in macroeconomics textbooks is a flawed description of the way the monetary system operates, having some positive minimum reserve requirements does constrain credit creation activities of the private banks more than if you have no requirements other than the rule that balances have to be positive.","ID":"2024","explanation":"","answers":[{"ID":"10197","answer":"False","correct":"1"},{"ID":"10196","answer":"True","correct":"0"}]},{"question":"3. With fiscal and monetary policy tied by the EMU arrangements, the only adjustment mechanism left for Eurozone Member States is to reduce wages and prices to restore external competitiveness. While harsh, eventually the competitive position improves, if wages and prices are successfully cut.n","ID":"2025","explanation":"","answers":[{"ID":"10201","answer":"False","correct":"1"},{"ID":"10200","answer":"True","correct":"0"}]}]}, {"ID":"539","name":"Quiz 2019 - 29","added_on":"2019-07-18 23:01:46","questions":[{"question":"1. For nations enjoying strong terms of trade (and external surplus), it is sensible for the government to run fiscal surpluses and accumulate them in a sovereign fund to create more space for non-inflationary spending in the future.","ID":"2026","explanation":"","answers":[{"ID":"10209","answer":"False","correct":"1"},{"ID":"10208","answer":"True","correct":"0"}]},{"question":"2. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.","ID":"2027","explanation":"","answers":[{"ID":"10211","answer":"False","correct":"1"},{"ID":"10210","answer":"True","correct":"0"}]},{"question":"3. It would be impossible for a central bank to directly purchase treasury debt to facilitate the national government"s fiscal deficit while still targeting a positive short-term policy rate.","ID":"2028","explanation":"","answers":[{"ID":"10213","answer":"False","correct":"1"},{"ID":"10212","answer":"True","correct":"0"}]}]}, {"ID":"540","name":"Quiz 2019 - 30","added_on":"2019-07-25 07:01:57","questions":[{"question":"1. The immediate impact on the net worth of the non-government sector does not vary if the government issued bonds to exactly match ($-for-$) the increase in its net public spending or chooses not to so match.","ID":"2029","explanation":"","answers":[{"ID":"10221","answer":"False","correct":"0"},{"ID":"10220","answer":"True","correct":"1"}]},{"question":"2. The wider the spread between the price the central bank sets on the reserves it provides the commercial banks on demand (so-called penalty rates) and the target policy rate the more difficult it becomes for the central bank to ensure the quantity of reserves is appropriate for maintaining its target policy rate.","ID":"2030","explanation":"","answers":[{"ID":"10223","answer":"False","correct":"0"},{"ID":"10222","answer":"True","correct":"1"}]},{"question":"3. Assume that a national is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would always find:","ID":"2031","explanation":"","answers":[{"ID":"10224","answer":"A fiscal deficit","correct":"1"},{"ID":"10225","answer":"A fiscal surplus","correct":"0"},{"ID":"10226","answer":"Cannot tell because we don"t know the scale of the private domestic sector saving as a % of GDP.","correct":"0"}]}]}, {"ID":"541","name":"Quiz 2019 - 31","added_on":"2019-08-01 23:31:11","questions":[{"question":"1. The more \\\"money\\\" there is in the economy the lower will be its value.","ID":"2032","explanation":"","answers":[{"ID":"10227","answer":"True","correct":"0"},{"ID":"10228","answer":"False","correct":"1"}]},{"question":"2. A balanced "budget" fiscal rule eliminates the cyclical sensitivity of the fiscal outcome to the automatic stabilisers.","ID":"2033","explanation":"","answers":[{"ID":"10229","answer":"True","correct":"0"},{"ID":"10230","answer":"False","correct":"1"}]},{"question":"3. Consumption adds to aggregate spending and imports represent spending lost to the domestic economy. The marginal propensity to consume (MPC) is conceptually the extra consumption that is induced for every extra dollar of national income. The marginal propensity to import (MPM) is similarly the extra spending on imports that is induced for every extra dollar of national income. If the MPC and MPM both rise by 0.1 then the impact on aggregate demand for every new dollar of national income generated will be neutral.","ID":"2034","explanation":"","answers":[{"ID":"10231","answer":"True","correct":"0"},{"ID":"10232","answer":"False","correct":"1"}]}]}, {"ID":"542","name":"Quiz 2019 - 32","added_on":"2019-08-08 21:26:23","questions":[{"question":"1. The IMF and the OECD and a range of central banks equate the Non-Accelerating Inflation Rate of Unemployment (NAIRU) with their concept of full employment and they use the NAIRU estimates to calibrate their structural deficit estimates. Accordingly, the structural deficits will typically be:","ID":"2035","explanation":"","answers":[{"ID":"10250","answer":"difficult to assess because their forecasts are subject to forecasting inaccuracy of the automatic stabilisers.","correct":"0"},{"ID":"10249","answer":"biased upwards thus indicating that the government fiscal stance is more expansionary than it actually is.","correct":"1"},{"ID":"10248","answer":"biased downwards thus indicating that the government fiscal stance is less expansionary than it actually is.","correct":"0"}]},{"question":"2. When a sovereign government issues debt it logically:","ID":"2036","explanation":"","answers":[{"ID":"10253","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"},{"ID":"10252","answer":"has no initial impact on the overall holdings of financial assets held by the non-government sector.","correct":"1"},{"ID":"10251","answer":"increases the assets that are initially held by the non-government sector $-for-$.","correct":"0"}]},{"question":"3. Only one of the following statements can be true when you observe rising government bond yields for new issues:","ID":"2037","explanation":"","answers":[{"ID":"10242","answer":"Government spending is becoming more expensive.","correct":"0"},{"ID":"10243","answer":"Bond prices are falling in response to demand.","correct":"1"},{"ID":"10244","answer":"Government spending is increasing the cost of borrowing for private investors.","correct":"0"}]}]}, {"ID":"543","name":"Quiz 2019 - 33","added_on":"2019-08-14 22:19:19","questions":[{"question":"1. For workers to maintain a constant share of a growing national income, the growth in wages (the money you get paid) must keep pace with inflation, if the latter, is accelerating at the same rate as labour productivity.","ID":"2038","explanation":"","answers":[{"ID":"10267","answer":"False","correct":"0"},{"ID":"10266","answer":"True","correct":"1"}]},{"question":"2. Central bankers are once again talking about the possible need for more quantitative easing to ease the aggregate spending losses associated with ongoing fiscal austerity programs in some countries. If calibrated correctly, QE can replace the net financial assets destroyed by the austerity.","ID":"2039","explanation":"","answers":[{"ID":"10269","answer":"False","correct":"1"},{"ID":"10268","answer":"True","correct":"0"}]},{"question":"3. Assume a government is attempting to stimulate the economy via an expansion in the fiscal deficit. The private market orientated advisors tell them to cut taxes and "privatise" the expansion whereas the more civic-minded advisors argue that there is a need for improved public infrastructure which requires increases in government spending. So imagine that the government is choosing between a tax cut that will reduce tax revenue at the current level of national income by $x and a spending increase of $x. Which policy option will have the greater initial impact on aggregate demand?","ID":"2040","explanation":"","answers":[{"ID":"10262","answer":"Tax cut","correct":"0"},{"ID":"10263","answer":"Spending increase","correct":"1"},{"ID":"10264","answer":"Both will be equivalent","correct":"0"},{"ID":"10265","answer":"There is not enough information to answer this question","correct":"0"}]}]}, {"ID":"544","name":"Quiz 2019 - 34","added_on":"2019-08-22 22:38:23","questions":[{"question":"1. A fiscal deficit equivalent to 3 per cent of GDP signals that the government is having a less expansionary impact than if the fiscal deficit outcome was equivalent to 5 per cent of GDP.","ID":"2041","explanation":"","answers":[{"ID":"10277","answer":"False","correct":"0"},{"ID":"10276","answer":"True","correct":"1"},{"ID":"10278","answer":"Cannot determine policy intent until we know the automatic stabiliser component","correct":"0"}]},{"question":"2. If the external balance remains in surplus and is adding to total spending, then the national government can run a fiscal surplus without preventing economic growth from occurring.","ID":"2042","explanation":"","answers":[{"ID":"10286","answer":"False","correct":"0"},{"ID":"10285","answer":"True","correct":"1"}]},{"question":"3. Consider the following table which describes four different economies in terms of the behavioural parameters relating to the leakages to aggregate demand. Assume that in all four economies, there is idle capacity, the central bank holds all interest rates constant, inflation is constant and there are no changes in international competitiveness.nn
n\\\"\\\"n
nnWhich economy would deliver the largest national income bonus for a given discretionary expansion in government spending.","ID":"2043","explanation":"","answers":[{"ID":"10279","answer":"Economy A","correct":"1"},{"ID":"10280","answer":"Economy B","correct":"0"},{"ID":"10281","answer":"Economy C","correct":"0"},{"ID":"10282","answer":"Economy D","correct":"0"}]}]}, {"ID":"545","name":"Quiz 2019 - 35","added_on":"2019-08-29 07:34:50","questions":[{"question":"1. The private domestic sector can save overall, even if the government fiscal balance is in surplus, as long as net exports are positive.","ID":"2044","explanation":"","answers":[{"ID":"10294","answer":"False","correct":"1"},{"ID":"10293","answer":"True","correct":"0"}]},{"question":"2. There is talk among central bankers of renewed programs of quantitative easing to fight off fears of recession as a result of the trade tensions. Fiscal stimulus is also being proposed. The two work in different ways but have the same ultimate impact on net worth in the non-government sector.n","ID":"2045","explanation":"","answers":[{"ID":"10300","answer":"False","correct":"1"},{"ID":"10299","answer":"True","correct":"0"}]},{"question":"3. While continuous national governments deficits are possible if the non-government sector desires to save overall, they do imply continuously rising public debt levels as a percentage of GDP (under current debt-issuance arrangements).","ID":"2046","explanation":"","answers":[{"ID":"10296","answer":"False","correct":"1"},{"ID":"10295","answer":"True","correct":"0"}]}]}, {"ID":"546","name":"Quiz 2019 - 36","added_on":"2019-09-05 20:42:16","questions":[{"question":"1. If the external sector overall is in deficit, it is still possible for the private domestic sector and government sector to run surpluses as long GDP growth is fast enough (the technical condition is that the rate of GDP growth has to be faster than the real interest rate).","ID":"2047","explanation":"","answers":[{"ID":"10308","answer":"False","correct":"1"},{"ID":"10307","answer":"True","correct":"0"}]},{"question":"2. Federal government debt (where there is currency sovereignty) is not really a liability because the government can just roll it over continuously and thus they never have to pay it back. This is different to a household, which not only has to service its debt but also has to repay them at the due date.","ID":"2048","explanation":"","answers":[{"ID":"10310","answer":"False","correct":"1"},{"ID":"10309","answer":"True","correct":"0"}]},{"question":"3. The term \\\"beggar-my-neighbour\\\" strategy describes a situation where a nation pushes its excess supply onto its trading partners is more applicable to Germany than China in the current situation.","ID":"2049","explanation":"","answers":[{"ID":"10312","answer":"False","correct":"0"},{"ID":"10311","answer":"True ","correct":"1"}]}]}, {"ID":"547","name":"Quiz 2019 - 37","added_on":"2019-09-12 22:38:02","questions":[{"question":"1. Government spending which is accompanied by a bond sale to the non-government sector adds less to aggregate spending than would be the case if there was no bond sale.","ID":"2050","explanation":"","answers":[{"ID":"10332","answer":"False","correct":"1"},{"ID":"10331","answer":"True","correct":"0"}]},{"question":"2. In the same way the spending multiplier indicates the extent to which GDP rises when there is a given rise in government spending, the tax multiplier captures the impact of rising tax rates on GDP as people reduce their labour supply because of the disincentives associated with taxation.","ID":"2051","explanation":"","answers":[{"ID":"10334","answer":"False","correct":"1"},{"ID":"10333","answer":"True","correct":"0"}]},{"question":"3. In a stock-flow consistent macroeconomics, we have to always trace the impact of flows during a period on the relevant stocks at the end of the period. Accordingly, government and private investment spending are two examples of flows that adds to the stock of aggregate demand which in turn impacts on GDP.","ID":"2052","explanation":"","answers":[{"ID":"10336","answer":"False","correct":"1"},{"ID":"10335","answer":"True","correct":"0"}]}]}, {"ID":"548","name":"Quiz 2019 - 38","added_on":"2019-09-12 22:39:16","questions":[{"question":"1. Some mainstream economists claim that a public debt ratio of 80 per cent is a dangerous threshold that should not be passed. Accordingly, governments should run primary surpluses (taxation revenue in excess of non-interest government spending) to keep the ratio below the threshold. Modern monetary theory tells us that while a currency-issuing government running a deficit can never reduce the debt ratio it doesn"t matter anyway because such a government faces no risk of insolvency.","ID":"2053","explanation":"","answers":[{"ID":"10338","answer":"False","correct":"1"},{"ID":"10337","answer":"True","correct":"0"}]},{"question":"2. Imagine that macroeconomic policy is geared towards keeping real GDP growth on trend. Assume this rate of growth is 3 per cent per annum. If labour productivity is growing at 2 per cent per annum and the labour force is growing at 1.5 per cent per annum and the average working week is constant in hours, then this policy regime will result in ","ID":"2054","explanation":"","answers":[{"ID":"10346","answer":"an unchanged unemployment rate","correct":"0"},{"ID":"10345","answer":"a falling unemployment rate","correct":"0"},{"ID":"10344","answer":"a rising unemployment rate","correct":"1"}]},{"question":"3. Students are taught that the macroeconomic income determination system can be thought of as a bath tub with the current GDP being the water level. The drain plug can be thought of as saving, imports and taxation payments (the so-called leakages from the expenditure system) while the taps can be thought of as investment, government spending and exports (the so-called exogenous injections into the spending system). This analogy is valid because GDP will be unchanged as long as the flows into the bath are equal to the flows out of it which is tantamount to saying the the spending gap left by the leakages is always filled by the injections.","ID":"2055","explanation":"","answers":[{"ID":"10343","answer":"False","correct":"1"},{"ID":"10342","answer":"True","correct":"0"}]}]}, {"ID":"549","name":"Quiz 2019 - 39","added_on":"2019-09-12 22:40:31","questions":[{"question":"1. From the US National Accounts, you find that in 2006, the share of Personal consumption expenditure in real GDP was 69.9 per cent and by 2008 it had fallen to 69.8 per cent. Similarly, the share of Gross private domestic investment on real GDP was 17.2 per cent in 2006 and by 2008 had fallen to 14.9 per cent (and further to 11.8 per cent in 2009). The net export deficit over the same period (2006 to 2008) fell from -5.7 per cent of real GDP to -4.9 per cent in 2008. Finally, the share of Government consumption expenditures and gross investment in real GDP rose from 18.8 per cent in 2006 to 18.9 per cent in 2008 (and 19.7 per cent in 2009). These relative changes tell you that real GDP was lower in 2008 compared to 2006 because the increase in Government spending and the falling negative contribution of net exports were not sufficient to offset the declining contribution from consumption and investment. ","ID":"2056","explanation":"","answers":[{"ID":"10348","answer":"False","correct":"1"},{"ID":"10347","answer":"True","correct":"0"}]},{"question":"2. Assume that a standard monthly Labour Force data release showed that employment grew by only 400 in net terms during the last month. Other highlights were that unemployment rose by 10,700 and that the labour force participation rate fell by 0.1 per cent indicating a rise in the proportion leaving the labour force. Taken together this data tells you that:","ID":"2057","explanation":"","answers":[{"ID":"10349","answer":"The labour force grew faster than employment but not as fast the working age population.","correct":"1"},{"ID":"10350","answer":"The working age population grew faster than employment and offset the decline in the labour force arising from the drop in the participation rate.","correct":"0"},{"ID":"10351","answer":"The labour force grew faster than employment but you cannot tell what happened to the working age population from the information provided.","correct":"0"}]},{"question":"3. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending or else national output and income will fall.","ID":"2058","explanation":"","answers":[{"ID":"10353","answer":"False","correct":"1"},{"ID":"10352","answer":"True","correct":"0"}]}]}, {"ID":"550","name":"Quiz 2019 - 40","added_on":"2019-10-03 21:47:22","questions":[{"question":"1. If there is more \\\"money\\\" in the economy its value inevitably declines.","ID":"2059","explanation":"","answers":[{"ID":"10361","answer":"False","correct":"1"},{"ID":"10360","answer":"True","correct":"0"}]},{"question":"2. If there was a fiscal rule imposed such that the national government had to balance its fiscal position at all times then this would also eliminate the sensitivity of the fiscal outcome to the automatic stabilisers.","ID":"2060","explanation":"","answers":[{"ID":"10363","answer":"False","correct":"1"},{"ID":"10362","answer":"True","correct":"0"}]},{"question":"3. The private domestic sector will always run a deficit (spend more than they earn) exactly equal to the external deficit on average over a complete economic cycle, if the government fiscal position averages out to zero over the same cycle.","ID":"2061","explanation":"","answers":[{"ID":"10365","answer":"False","correct":"0"},{"ID":"10364","answer":"True","correct":"1"}]}]}, {"ID":"551","name":"Quiz 2019 - 41","added_on":"2019-10-10 03:45:10","questions":[{"question":"1. The price at which the central bank provides reserves to the commercial banks is restricted by its target monetary policy rate.","ID":"2062","explanation":"","answers":[{"ID":"10377","answer":"False","correct":"0"},{"ID":"10376","answer":"True ","correct":"1"}]},{"question":"2. For a country facing strong terms and trade and an appreciating currency, a cut in wages and the rate of inflation will restore international competitiveness.","ID":"2063","explanation":"","answers":[{"ID":"10375","answer":"False","correct":"1"},{"ID":"10374","answer":"True","correct":"0"}]},{"question":"3. If the fiscal deficit rises then government policy is becoming more expansionary.","ID":"2064","explanation":"","answers":[{"ID":"10373","answer":"False","correct":"1"},{"ID":"10372","answer":"True","correct":"0"}]}]}, {"ID":"552","name":"Quiz 2019 - 42","added_on":"2019-10-17 20:34:06","questions":[{"question":"1. The government has to issue debt if the policy interest rate is positive unless the central bank pays a positive interest rate on overnight reserves.","ID":"2065","explanation":"","answers":[{"ID":"10385","answer":"False","correct":"0"},{"ID":"10384","answer":"True","correct":"1"}]},{"question":"2. Other things equal, larger fiscal deficits as a percentage of GDP squeeze the availability of real resources that the private sector can use for other productive uses.","ID":"2066","explanation":"","answers":[{"ID":"10387","answer":"False","correct":"0"},{"ID":"10386","answer":"True","correct":"1"}]},{"question":"3. For a nation running a small external deficit, the government fiscal position will always be in deficit if the domestic private sector successfully spends less than its income.","ID":"2067","explanation":"","answers":[{"ID":"10389","answer":"False","correct":"0"},{"ID":"10388","answer":"True","correct":"1"}]}]}, {"ID":"553","name":"Quiz 2019 - 43","added_on":"2019-10-24 21:48:14","questions":[{"question":"1. A sovereign national government can run a balanced fiscal position over the economic cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will only be able to save overall if the external balance is in surplus.","ID":"2068","explanation":"","answers":[{"ID":"10405","answer":"False","correct":"0"},{"ID":"10404","answer":"True ","correct":"1"}]},{"question":"2. Modern Monetary Theory (MMT) demonstrates that excessive real wages can cause unemployment.","ID":"2069","explanation":"","answers":[{"ID":"10407","answer":"False","correct":"0"},{"ID":"10406","answer":"True","correct":"1"}]},{"question":"3. If workers are to get a larger share of GDP then their wages have to grow faster than inflation.","ID":"2070","explanation":"","answers":[{"ID":"10409","answer":"False","correct":"1"},{"ID":"10408","answer":"True","correct":"0"}]}]}, {"ID":"554","name":"Quiz 2019 - 44","added_on":"2019-10-24 21:49:48","questions":[{"question":"1. Organisations such as the IMF and the OECD and many central banks use the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) to estimate full capacity, which then allows them to calibrate their structural deficit estimates, which indicate the discretionary fiscal stance of the government in question. Accordingly, the structural deficits will typically be:","ID":"2071","explanation":"","answers":[{"ID":"10410","answer":"biased downwards","correct":"0"},{"ID":"10411","answer":"biased upwards","correct":"1"},{"ID":"10412","answer":"difficult to assess because their forecasts are subject to forecasting inaccuracy.","correct":"0"}]},{"question":"2. When a sovereign government issues debt it logically:","ID":"2072","explanation":"","answers":[{"ID":"10421","answer":"reduces the capacity of the private sector to borrow from banks","correct":"0"},{"ID":"10420","answer":"has no impact on the overall holdings of financial assets held by the non-government sector $-for-$.","correct":"1"},{"ID":"10419","answer":"increases the net financial assets that are held by the non-government sector $-for-$.","correct":"0"}]},{"question":"3. Only one of the following statements is definitely true when you observe rising government bond yields for new issues:","ID":"2073","explanation":"","answers":[{"ID":"10416","answer":"Government spending is becoming more expensive.","correct":"0"},{"ID":"10417","answer":"Bond prices are falling in response to falling demand.","correct":"1"},{"ID":"10418","answer":"Government spending is increasing the cost of borrowing for private investors.","correct":"0"}]}]}, {"ID":"555","name":"Quiz 2019 - 45","added_on":"2019-11-08 02:27:02","questions":[{"question":"1. If the government increases its fiscal deficit as a percentage of GDP it will squeeze the real resources available for private productive uses.","ID":"2074","explanation":"","answers":[{"ID":"10437","answer":"False","correct":"0"},{"ID":"10436","answer":"True","correct":"1"}]},{"question":"2. For a nation running a current account deficit, national income adjustments will ensure government"s fiscal position is in deficit no matter what the government"s intentions are if the private domestic sector is spending less than its income.","ID":"2075","explanation":"","answers":[{"ID":"10431","answer":"False","correct":"0"},{"ID":"10430","answer":"True","correct":"1"}]},{"question":"3. Specific legal considerations aside, it would be impossible for a government to avoid issuing debt to the private sector when running a fiscal deficit while the central bank was targeting a positive short-term policy rate.","ID":"2076","explanation":"","answers":[{"ID":"10435","answer":"False","correct":"1"},{"ID":"10434","answer":"True","correct":"0"}]}]}, {"ID":"556","name":"Quiz 2019 - 46","added_on":"2019-11-14 04:03:35","questions":[{"question":"1. A currency-issuing government does not control the fiscal outcome.","ID":"2077","explanation":"","answers":[{"ID":"10445","answer":"False","correct":"0"},{"ID":"10444","answer":"True","correct":"1"}]},{"question":"2. If employment growth matches the pace of growth in the working age population (people above 15 years of age) then the economy will experience a constant unemployment rate as long as participation rates do not change.","ID":"2078","explanation":"","answers":[{"ID":"10447","answer":"False","correct":"0"},{"ID":"10446","answer":"True","correct":"1"}]},{"question":"3. In a fiat monetary system (for example, US or Australia) with an on-going external deficit and fiscal deficit that is smaller than the external sector, then the domestic private sector is in:","ID":"2079","explanation":"","answers":[{"ID":"10452","answer":"Surplus","correct":"0"},{"ID":"10451","answer":"Cannot tell without knowing the actual deficits as a percent of GDP.","correct":"0"},{"ID":"10453","answer":"Deficit","correct":"1"}]}]}, {"ID":"557","name":"Quiz 2019 - 47","added_on":"2019-11-20 16:14:58","questions":[{"question":"1. Continuous fiscal deficits are more likely to present an inflation risk than one-off deficits designed to meet a short-term private spending decline.","ID":"2080","explanation":"","answers":[{"ID":"10461","answer":"False","correct":"1"},{"ID":"10460","answer":"True","correct":"0"}]},{"question":"2. A nation running an external deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit) will soon be in recession unless the private domestic sector is willing to continually increase its overall indebtedness.","ID":"2081","explanation":"","answers":[{"ID":"10463","answer":"False","correct":"0"},{"ID":"10462","answer":"True","correct":"1"}]},{"question":"3. To maintain financial stability, the monetary base has to be driven by changes in the money supply just as the money multiplier in mainstream macroeconomics textbooks explains.","ID":"2082","explanation":"","answers":[{"ID":"10465","answer":"False","correct":"1"},{"ID":"10464","answer":"True","correct":"0"}]}]}, {"ID":"558","name":"Quiz 2019 - 48","added_on":"2019-11-28 05:50:04","questions":[{"question":"1. The distinction between structural and the cyclical components of the final government balance helps us to determine the direction of the discretionary fiscal policy stance of the government. In that context, which of the following situations represents the more expansionary outcome:","ID":"2083","explanation":"","answers":[{"ID":"10481","answer":"You cannot tell because you do not know the decomposition between the cyclical and structural components.","correct":"0"},{"ID":"10479","answer":"A government deficit equivalent to 5 per cent of GDP","correct":"1"},{"ID":"10480","answer":"A government deficit equivalent to 3 per cent of GDP","correct":"0"}]},{"question":"2. If private domestic investment is greater than private domestic saving and the current account is in deficit then the government balance has to be in deficit at all levels of GDP.","ID":"2084","explanation":"","answers":[{"ID":"10483","answer":"False","correct":"1"},{"ID":"10482","answer":"True","correct":"0"}]},{"question":"3. If a central bank uses \\\"overt monetary financing\\\" (OMF) to support the net public spending, it would still require debt issuance if they wanted to target a non-zero policy interest rate.","ID":"2085","explanation":"","answers":[{"ID":"10478","answer":"False","correct":"1"},{"ID":"10477","answer":"True","correct":"0"}]}]}, {"ID":"559","name":"Quiz 2019 - 49","added_on":"2019-12-05 21:29:07","questions":[{"question":"1. In the recent European Commission Autumn 2019 Economic Forecast we learned that many nations, still carrying elevated levels of unemployment were judged to be operating at over-full capacity. This tells us that the Commission"s structural deficit estimates are typically:","ID":"2086","explanation":"","answers":[{"ID":"10495","answer":"difficult to assess because their forecasts are subject to forecasting inaccuracy.","correct":"0"},{"ID":"10493","answer":"biased downwards","correct":"0"},{"ID":"10494","answer":"biased upwards","correct":"1"}]},{"question":"2. When a sovereign government issues debt it logically increases the financial assets that are held by the non-government sector $-for-$.","ID":"2087","explanation":"","answers":[{"ID":"10497","answer":"False","correct":"1"},{"ID":"10496","answer":"True","correct":"0"}]},{"question":"3. Open market operations as a means of ensuring that levels of bank reserves are consistent with the policy target become redundant if the central bank pays a positive interest rate on overnight reserves held by the commercial banks (ignore any reserve requirements in place when answering).","ID":"2088","explanation":"","answers":[{"ID":"10499","answer":"False","correct":"0"},{"ID":"10498","answer":"True","correct":"0"},{"ID":"10500","answer":"Maybe","correct":"1"}]}]}, {"ID":"560","name":"Quiz 2019 - 50","added_on":"2019-12-13 01:32:11","questions":[{"question":"1. The use of a fiscal surplus to create a sovereign fund provides a currency-issuing government with greater spending capacity in the future.","ID":"2089","explanation":"","answers":[{"ID":"10510","answer":"False","correct":"1"},{"ID":"10509","answer":"True","correct":"0"}]},{"question":"2. If employment growth matches the pace of growth in the working age population (people above 15 years of age) then the economy will experience a constant unemployment rate as long as participation rates do not change.","ID":"2090","explanation":"","answers":[{"ID":"10512","answer":"False","correct":"0"},{"ID":"10511","answer":"True","correct":"1"}]},{"question":"3. In a fiat monetary system with an on-going external deficit, the domestic private sector cannot save overall, if the national government runs a fiscal deficit.","ID":"2091","explanation":"","answers":[{"ID":"10514","answer":"False","correct":"1"},{"ID":"10513","answer":"True","correct":"0"}]}]}, {"ID":"561","name":"Quiz 2019 - 51","added_on":"2019-12-19 22:25:17","questions":[{"question":"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 was to stay constant and the external surplus rises to the equivalent of 4 per cent of GDP then:","ID":"2092","explanation":"","answers":[{"ID":"10521","answer":"GDP rises and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"10522","answer":"GDP falls and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"10523","answer":"GDP rises and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"1"},{"ID":"10524","answer":"GDP remains unchanged and the private domestic surplus moves from 0 per cent of GDP to 4 per cent of GDP.","correct":"0"},{"ID":"10525","answer":"GDP falls and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"}]},{"question":"2. While tax liabilities are crucial to legimitise government spending, the resulting tax revenue does not fund the spending. However, it does cause unemployment.","ID":"2093","explanation":"","answers":[{"ID":"10527","answer":"False","correct":"0"},{"ID":"10526","answer":"True","correct":"1"}]},{"question":"3. Some progressives call for bank lending to be more closely regulated to ensure that all bank loans were backed by reserves held at the central bank to stop another credit binge. However, financial market interests argue that this would unnecessarily reduce the capacity of the banks to lend and damage the economy. Both are wrong.","ID":"2094","explanation":"","answers":[{"ID":"10529","answer":"False","correct":"0"},{"ID":"10528","answer":"True","correct":"1"}]}]}, {"ID":"562","name":"Quiz 2019 - 52","added_on":"2019-12-26 14:42:32","questions":[{"question":"1. 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 spend less than they earn.","ID":"2095","explanation":"","answers":[{"ID":"10549","answer":"False","correct":"0"},{"ID":"10548","answer":"True","correct":"1"}]},{"question":"2. A leakage from the spending system can occur via taxation, imports or saving which reduces the expenditure multiplier effect of government spending. Another leakage, which reduces the expansionary impact of government deficit spending on aggregate demand, occurs when the government matches the fiscal deficit with debt-issuance and drains private sector purchasing power.","ID":"2096","explanation":"","answers":[{"ID":"10543","answer":"False","correct":"1"},{"ID":"10542","answer":"True","correct":"0"}]},{"question":"3. The government deficit outcome each year published by the relevant statistical agencies summarises the economic policy stance of the government.","ID":"2097","explanation":"","answers":[{"ID":"10547","answer":"False","correct":"1"},{"ID":"10546","answer":"True ","correct":"0"}]},{"question":"4. The largest challenge facing the world in the face of anthropomorphic climate change is:n","ID":"2098","explanation":"","answers":[{"ID":"10536","answer":"The glaciers are melting.","correct":"0"},{"ID":"10537","answer":"Sea levels are rising.","correct":"0"},{"ID":"10538","answer":"Increased drought, storm and bush fire activity.","correct":"0"},{"ID":"10539","answer":"Santa might have to relocate as the North Pole melts.","correct":"1"}]}]}, {"ID":"563","name":"Quiz 2020 - 1","added_on":"2020-01-02 21:07:14","questions":[{"question":"1. The government has two macroeconomic policy arms available - fiscal and monetary policy. However, it only has control over monetary policy","ID":"2099","explanation":"","answers":[{"ID":"10550","answer":"True","correct":"1"},{"ID":"10551","answer":"False","correct":"0"}]},{"question":"2. Americans enjoy a higher material standard of living as a result of the Chinese holdings of US government debt.","ID":"2100","explanation":"","answers":[{"ID":"10557","answer":"False","correct":"0"},{"ID":"10556","answer":"True","correct":"1"}]},{"question":"3. A strategy to force the government to maintain a balanced fiscal position that the private domestic sector has to be continuously accumulating debt unless the external account moves into surplus.","ID":"2101","explanation":"","answers":[{"ID":"10554","answer":"True","correct":"1"},{"ID":"10555","answer":"False","correct":"0"}]}]}, {"ID":"564","name":"Quiz 2020 - 2","added_on":"2020-01-08 17:07:24","questions":[{"question":"1. Quantitative easing and an expansion of net public spending both add net financial assets to the non-government sector but the former aims to stimulate demand by lowering interest rates while the latter policy choice more directly adds demand to the system.","ID":"2102","explanation":"","answers":[{"ID":"10565","answer":"False","correct":"1"},{"ID":"10564","answer":"True","correct":"0"}]},{"question":"2. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"2103","explanation":"","answers":[{"ID":"10573","answer":"False","correct":"1"},{"ID":"10572","answer":"True ","correct":"0"}]},{"question":"3. When a government such as the US or Australian government voluntarily constrains itself by issuing debt to the private sector to match its net spending position (deficit), it reduces the funds available for private spending.","ID":"2104","explanation":"","answers":[{"ID":"10571","answer":"False","correct":"1"},{"ID":"10570","answer":"True","correct":"0"}]}]}, {"ID":"565","name":"Quiz 2020 - 3","added_on":"2020-01-16 05:22:39","questions":[{"question":"1. The net worth of the non-government sector would be initially invariant to a decision by government to match or not to match its net public spending with bond issues.n","ID":"2105","explanation":"","answers":[{"ID":"10581","answer":"False","correct":"0"},{"ID":"10580","answer":"True","correct":"1"}]},{"question":"2. The wider the spread between the price the central bank sets on the reserves it provides the commercial banks on demand (so-called penalty rates) and the target policy rate, the more difficult it becomes for the central bank to ensure the quantity of reserves is appropriate for maintaining its target policy rate.","ID":"2106","explanation":"","answers":[{"ID":"10583","answer":"False","correct":"0"},{"ID":"10582","answer":"True","correct":"1"}]},{"question":"3. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would always find:","ID":"2107","explanation":"","answers":[{"ID":"10589","answer":"Cannot tell because we don"t know the amount the private domestic sector is saving overall as a % of GDP.","correct":"0"},{"ID":"10587","answer":"A fiscal deficit","correct":"1"},{"ID":"10588","answer":"A fiscal surplus","correct":"0"}]}]}, {"ID":"566","name":"Quiz 2020 - 4","added_on":"2020-01-23 20:13:22","questions":[{"question":"1. A fact that is overlooked by those promoting austerity programs, is that when economic growth resumes, the automatic stabilisers work in a counter-cyclical fashion and ensure that the government fiscal balance returns to its appropriate level.","ID":"2108","explanation":"","answers":[{"ID":"10597","answer":"False","correct":"1"},{"ID":"10596","answer":"True","correct":"0"}]},{"question":"2. From a monetary perspective, it would be impossible for a central bank to directly purchase Treasury debt to facilitate a national government"s fiscal deficit while still targeting a non-zero policy rate.","ID":"2109","explanation":"","answers":[{"ID":"10605","answer":"False","correct":"1"},{"ID":"10604","answer":"True","correct":"0"}]},{"question":"3. . Rising government bond yields for new issues indicate:","ID":"2110","explanation":"","answers":[{"ID":"10598","answer":"that government spending is becoming more expensive.","correct":"0"},{"ID":"10599","answer":"that economic growth is reducing private risk assessments of alternative financial investments.","correct":"0"},{"ID":"10600","answer":"that government spending is increasing the cost of borrowing for private investors.","correct":"0"},{"ID":"10601","answer":"that private investors consider public debt to be riskier.","correct":"0"},{"ID":"10602","answer":"Answers (a) and (d) depending on the situation.","correct":"0"},{"ID":"10603","answer":"Answers (b) and (d) depending on the situation.","correct":"1"}]}]}, {"ID":"567","name":"Quiz 2020 - 5","added_on":"2020-01-30 03:57:13","questions":[{"question":"1. When a national government announces its fiscal balance has moved into surplus:nnit is a sign that the government is trying to constrain economic activity.nit is a sign that the government is worried that inflation is rising.nyou cannot conclude anything about the government"s policy intentions.nOptions (a) and (b).","ID":"2111","explanation":"","answers":[{"ID":"10612","answer":"It is a sign that the government is trying to constrain economic activity.","correct":"0"},{"ID":"10613","answer":"It is a sign that the government is worried that inflation is rising.","correct":"0"},{"ID":"10614","answer":"You cannot conclude anything about the government"s policy intentions.","correct":"1"},{"ID":"10615","answer":"Options (a) and (b).","correct":"0"}]},{"question":"2. If the external balance remains in surplus, then the national government can run a fiscal surplus without impeding economic growth.n","ID":"2112","explanation":"","answers":[{"ID":"10617","answer":"False","correct":"0"},{"ID":"10616","answer":"True","correct":"1"}]},{"question":"3. In Year 1, the economy plunges into recession with nominal GDP growth falling to minus -1 per cent. The inflation rate is subdued at 1 per cent per annum. The outstanding public debt is equal to the value of the nominal GDP and the nominal interest rate is equal to 1 per cent (and this is the rate the government pays on all outstanding debt). As a result of the recession, the government"s fiscal balance, net of interest payments, goes into deficit equivalent to 1 per cent of GDP and the public debt ratio rises by 3 per cent. In Year 2, the government stimulates the economy and doubles the primary fiscal deficit relative to GDP, and, in doing so, stimulates aggregate demand such that the economy records a 4 per cent nominal GDP growth rate. All other parameters are unchanged in Year 2. Under these circumstances, the public debt ratio will rise but by an amount less than the rise in the fiscal deficit because of the real growth in the economy.","ID":"2113","explanation":"","answers":[{"ID":"10619","answer":"False","correct":"1"},{"ID":"10618","answer":"True","correct":"0"},{"ID":"10620","answer":"Not enough information to make a conclusion","correct":"0"}]}]}, {"ID":"568","name":"Quiz 2020 - 6","added_on":"2020-02-06 09:35:08","questions":[{"question":"1. For workers to get a rising share of national income their nominal wages have to grow faster than inflation.","ID":"2114","explanation":"","answers":[{"ID":"10628","answer":"False","correct":"1"},{"ID":"10627","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory implies that higher levels of taxation are not necessary for the government to spend more in real terms.","ID":"2115","explanation":"","answers":[{"ID":"10630","answer":"False","correct":"1"},{"ID":"10629","answer":"True","correct":"0"}]},{"question":"3. After a deep recession, governments wanting to reduce their unemployment rates should use expansionary fiscal policy such that real GDP growth equals the sum of the labour productivity growth and the labour force growth rate.","ID":"2116","explanation":"","answers":[{"ID":"10634","answer":"False","correct":"1"},{"ID":"10633","answer":"True","correct":"0"}]}]}, {"ID":"569","name":"Quiz 2020 - 7","added_on":"2020-02-12 13:30:20","questions":[{"question":"1. Adherence to a "balanced budget rule", measured over a full economic cycle (peak to peak) will force the private domestic sector balance to run a deficit on average if the external balance is in deficit on average over the same cycle. n","ID":"2117","explanation":"","answers":[{"ID":"10651","answer":"False","correct":"0"},{"ID":"10650","answer":"True","correct":"1"}]},{"question":"2. Modern Monetary Theory (MMT) teaches us that a sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues:","ID":"2118","explanation":"","answers":[{"ID":"10643","answer":"The less is the volume of investment funds in the non-government sector that can be used for other investments.","correct":"0"},{"ID":"10644","answer":"The greater is non-government wealth held in the form of public debt.","correct":"1"},{"ID":"10645","answer":"The more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"},{"ID":"10646","answer":"All of the above.","correct":"0"}]},{"question":"3. A fiscal surplus indicates that the national government is:","ID":"2119","explanation":"","answers":[{"ID":"10647","answer":"Trying to slow the economy down and contain inflation.","correct":"0"},{"ID":"10648","answer":"Trying to reduce public debt.","correct":"0"},{"ID":"10649","answer":"You cannot conclude anything about the government"s policy intentions.","correct":"1"}]}]}, {"ID":"570","name":"Quiz 2020 - 8","added_on":"2020-02-20 01:07:19","questions":[{"question":"1. A program of fiscal austerity, defined as the government running a fiscal surplus, does not necessarily undermine economic growth.","ID":"2120","explanation":"","answers":[{"ID":"10665","answer":"False","correct":"0"},{"ID":"10664","answer":"True","correct":"1"}]},{"question":"2. The public debt ratio is of no concern because it falls once economic growth resumes.","ID":"2121","explanation":"","answers":[{"ID":"10661","answer":"False","correct":"1"},{"ID":"10660","answer":"True","correct":"0"}]},{"question":"3. The initial expansionary impact of deficit spending on aggregate demand is lower when the government matches the deficit with debt-issuance compared to a situation when it issues no debt.","ID":"2122","explanation":"","answers":[{"ID":"10663","answer":"False","correct":"1"},{"ID":"10662","answer":"True","correct":"0"}]}]}, {"ID":"571","name":"Quiz 2020 - 9","added_on":"2020-02-26 21:29:25","questions":[{"question":"1. Estimates of the structural fiscal balances are typically based on overly pessimistic estimates of potential GDP and thus should be disregarded.","ID":"2123","explanation":"","answers":[{"ID":"10683","answer":"False","correct":"0"},{"ID":"10682","answer":"True","correct":"1"}]},{"question":"2. For a nation with a strong terms of trade (and external surplus), it is wise for the government to run fiscal surpluses and accumulate them in a sovereign fund to create more future space for non-inflationary spending.","ID":"2124","explanation":"","answers":[{"ID":"10677","answer":"False","correct":"1"},{"ID":"10676","answer":"True","correct":"0"}]},{"question":"3. A currency-issuing government, that is, one that issues its own floating currency never faces solvency risk with respect to the debt it issues.","ID":"2125","explanation":"","answers":[{"ID":"10685","answer":"False","correct":"1"},{"ID":"10684","answer":"True","correct":"0"}]}]}, {"ID":"572","name":"Quiz 2020 - 10","added_on":"2020-03-05 15:51:31","questions":[{"question":"1. While the desire by governments to reduce their public debt ratios through fiscal austerity is ill-founded, the strategy will always succeed but at the cost of higher unemployment.","ID":"2126","explanation":"","answers":[{"ID":"10693","answer":"False","correct":"1"},{"ID":"10692","answer":"True","correct":"0"}]},{"question":"2. The Confederate government in 1861 could have eased the inflationary impact of its war spending by issuing more bonds than it did.","ID":"2127","explanation":"","answers":[{"ID":"10695","answer":"False","correct":"1"},{"ID":"10694","answer":"True","correct":"0"}]},{"question":"3. When net exports are negative, government deficits will be required if the private domestic sector is to save overall.","ID":"2128","explanation":"","answers":[{"ID":"10699","answer":"False","correct":"0"},{"ID":"10698","answer":"True","correct":"1"}]}]}, {"ID":"573","name":"Quiz 2020 - 11","added_on":"2020-03-12 21:20:03","questions":[{"question":"1. Italy is currently in crisis but would have to undergo a period of austerity if it restored its currency and renegotiated all Euro debts into the New Lira (that is, defaulted) because investors would be reluctant to purchase Italian government debt.","ID":"2129","explanation":"","answers":[{"ID":"10717","answer":"False","correct":"1"},{"ID":"10716","answer":"True","correct":"0"}]},{"question":"2. If policy makers use NAIRU estimates to compute the decomposition between structural and cyclical fiscal balances and these estimates are above the true full employment unemployment rate, then the estimated impact of the automatic stabilisers will always be biased downwards.","ID":"2130","explanation":"","answers":[{"ID":"10721","answer":"False","correct":"0"},{"ID":"10720","answer":"True","correct":"1"}]},{"question":"3. Central bank balance sheet management aimed at controlling the yields on public debt at all maturities may not have much impact on the term structure during periods of high inflation.","ID":"2131","explanation":"","answers":[{"ID":"10711","answer":"False","correct":"0"},{"ID":"10710","answer":"True","correct":"1"}]},{"question":"4. ECB boss Christine Lagarde told the world on Thursday (March 12, 2020) that \\\"we are not here to close spreads, that"s not function of ECB\\\".","ID":"2132","explanation":"","answers":[{"ID":"10712","answer":"She should be sacked","correct":"1"},{"ID":"10713","answer":"There is no other option","correct":"0"}]}]}, {"ID":"574","name":"Quiz 2020 - 12","added_on":"2020-03-19 17:18:11","questions":[{"question":"1. Given that most governments are sovereign in their own currencies, there is no limit on the expenditure that these governments can introduce to deal with the coronavirus emergency.","ID":"2133","explanation":"","answers":[{"ID":"10729","answer":"False","correct":"1"},{"ID":"10728","answer":"True","correct":"0"}]},{"question":"2. A rising government deficit will always allow the household sector to increase its saving in nominal terms","ID":"2134","explanation":"","answers":[{"ID":"10731","answer":" False","correct":"0"},{"ID":"10730","answer":"True","correct":"1"}]},{"question":"3. A rising government deficit always indicates an expansionary shift in policy.","ID":"2135","explanation":"","answers":[{"ID":"10733","answer":"False","correct":"1"},{"ID":"10732","answer":"True","correct":"0"}]}]}, {"ID":"575","name":"Quiz 2020 - 13","added_on":"2020-03-26 21:29:53","questions":[{"question":"1. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"2136","explanation":"","answers":[{"ID":"10757","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"},{"ID":"10756","answer":"A nation can run an external deficit with a fiscal surplus that is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"10755","answer":"A nation can run an external deficit with an offsetting fiscal surplus, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"10754","answer":"A nation can run an external deficit with an offsetting fiscal surplus, while the private domestic sector is spending less than they are earning.","correct":"0"}]},{"question":"2. It won"t be long before the European Commission demands that Eurozone nations are forced to pursue internal devaluation through austerity programs that are designed to deflate nominal wages and prices to allegedly improve their relative competitiveness. Ignoring whether the logic is correct or not, which of the following propositions must also follow within the internal devaluation logic:","ID":"2137","explanation":"","answers":[{"ID":"10752","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and what happens to employment is irrelevant.","correct":"1"},{"ID":"10751","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and employment must grow.","correct":"0"},{"ID":"10750","answer":"If wages and prices fall at the same rate, then labour productivity has to rise and employment remain constant or grow.","correct":"0"},{"ID":"10753","answer":"None of the above","correct":"0"}]},{"question":"3. One possible problem with running continuous fiscal deficits is that the spending builds up over time and with inflation eventually becoming the risk that has to be managed.","ID":"2138","explanation":"","answers":[{"ID":"10741","answer":"False","correct":"1"},{"ID":"10740","answer":"True ","correct":"0"}]}]}, {"ID":"576","name":"Quiz 2020 - 14","added_on":"2020-04-02 03:56:51","questions":[{"question":"1. In a fixed coupon government bond auction, the higher is the demand for the bonds, the higher the yields will be at that asset maturity which suggests that larger fiscal deficits will eventually drive short-term interest rates down","ID":"2139","explanation":"","answers":[{"ID":"10771","answer":"False","correct":"1"},{"ID":"10770","answer":"True","correct":"0"}]},{"question":"2. If the non-government sector desires to net save in the currency of issue and acts accordingly, national income (GDP) adjustments will ensure the government sector is in deficit, irrespective of the intentions of the government.","ID":"2140","explanation":"","answers":[{"ID":"10767","answer":"False","correct":"0"},{"ID":"10766","answer":"True","correct":"1"}]},{"question":"3. The more public debt a currency-issuing government voluntarily issues the more difficult it is for banks to attract deposits to initiate loans from.","ID":"2141","explanation":"","answers":[{"ID":"10773","answer":"False","correct":"1"},{"ID":"10772","answer":"True","correct":"0"}]}]}, {"ID":"577","name":"Quiz 2020 - 15","added_on":"2020-04-09 23:17:04","questions":[{"question":"1. The public debt ratio will always fall when economic growth is positive because the primary fiscal deficit falls due to the automatic stabilisers (more tax revenue, less welfare spending), and, the denominator, GDP rises.","ID":"2142","explanation":"","answers":[{"ID":"10774","answer":"True","correct":"0"},{"ID":"10775","answer":" False","correct":"1"}]},{"question":"2. The Bank of England will, under a new arrangement with H.M. Treasury, be able to credit bank accounts on behalf of government, without the government having to match its fiscal deficits with private debt issuance. This means they will not be able to maintain an interest rate target above zero per cent.n","ID":"2143","explanation":"","answers":[{"ID":"10776","answer":"True","correct":"0"},{"ID":"10777","answer":"False","correct":"1"}]},{"question":"3. One important lesson to be drawn from Modern Monetary Theory (MMT), which is overlooked in the current pandemic, is that when economic growth resumes, the automatic stabilisers work will ensure that the government fiscal balance returns to its appropriate level.","ID":"2144","explanation":"","answers":[{"ID":"10778","answer":"True","correct":"0"},{"ID":"10779","answer":"False","correct":"1"}]}]}, {"ID":"578","name":"Quiz 2020 - 16","added_on":"2020-04-16 23:09:04","questions":[{"question":"1. From the perspective of Modern Monetary Theory (MMT), mass unemployment can arise from workers demanding excessive real wages.","ID":"2145","explanation":"","answers":[{"ID":"10787","answer":"False","correct":"0"},{"ID":"10786","answer":"True","correct":"1"}]},{"question":"2. If a government balances its fiscal position over a given economic cycle (peak to peak), then the private domestic sector will be increasingly indebted if there is an average external deficit over the same cycle.","ID":"2146","explanation":"","answers":[{"ID":"10791","answer":"False","correct":"0"},{"ID":"10790","answer":"True","correct":"1"}]},{"question":"3. If wages keep pace with inflation, which is accelerating at the same rate as labour productivity then the share of wages in GDP remains unchanged.","ID":"2147","explanation":"","answers":[{"ID":"10789","answer":"False","correct":"0"},{"ID":"10788","answer":"True","correct":"1"}]}]}, {"ID":"579","name":"Quiz 2020 - 17","added_on":"2020-04-23 22:22:07","questions":[{"question":"1. When the government borrows from the non-government sector it eventually has to pay the bonds back on maturity. This will not be inflationary because the sovereign government just has to credit the bank accounts of those who hold the bonds to repay them.","ID":"2148","explanation":"","answers":[{"ID":"10799","answer":"False","correct":"1"},{"ID":"10798","answer":"True","correct":"0"}]},{"question":"2. When an external deficit and public deficit coincide, there must be a private sector deficit, given the sectoral balances framework.","ID":"2149","explanation":"","answers":[{"ID":"10801","answer":"False","correct":"1"},{"ID":"10800","answer":"True","correct":"0"}]},{"question":"3. In a situation where the private domestic sector embarks on an attempt to lift its overall saving ratio, we cannot conclude that the national government has to increase its net spending (deficit) to avoid employment losses.","ID":"2150","explanation":"","answers":[{"ID":"10803","answer":"False","correct":"0"},{"ID":"10802","answer":"True ","correct":"1"}]}]}, {"ID":"580","name":"Quiz 2020 - 18","added_on":"2020-04-30 20:41:37","questions":[{"question":"1. In a fixed coupon government bond auction, the higher is the demand for the bonds:","ID":"2151","explanation":"","answers":[{"ID":"10820","answer":"the lower the yields will be at that asset maturity but this tells us nothing about the effect of fiscal deficits on short-term interest rates.","correct":"1"},{"ID":"10819","answer":"the lower the yields will be at that asset maturity which suggests that higher fiscal deficits will eventually drive short-term interest rates down.","correct":"0"},{"ID":"10818","answer":"the higher the yields will be at that asset maturity which suggests that higher fiscal deficits will eventually drive short-term interest rates down.","correct":"0"}]},{"question":"2. The more public debt a currency-issuing government voluntarily issues:","ID":"2152","explanation":"","answers":[{"ID":"10810","answer":"the less is the volume of funds in the non-government sector that can be used for other investments.","correct":"0"},{"ID":"10811","answer":"the greater is non-government wealth held in the form of public debt.","correct":"1"},{"ID":"10812","answer":"the more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"}]},{"question":"3. A fiscal deficit that is equivalent to 5 per cent of GDP always signals a more expansionary fiscal intent from government than a fiscal deficit outcome that is equivalent to 3 per cent of GDP.","ID":"2153","explanation":"","answers":[{"ID":"10822","answer":"False","correct":"1"},{"ID":"10821","answer":"True ","correct":"0"},{"ID":"10823","answer":"Maybe","correct":"0"}]}]}, {"ID":"581","name":"Quiz 2020 - 19","added_on":"2020-05-07 23:02:08","questions":[{"question":"1. If there is more \\\"money\\\" in the economy its value always declines.","ID":"2154","explanation":"","answers":[{"ID":"10831","answer":"False","correct":"1"},{"ID":"10830","answer":"True","correct":"0"}]},{"question":"2. If national government public works expenditure funds the construction of a road and then the government tears the road up again and rebuilds it, there is no net gain in national income the second time round.","ID":"2155","explanation":"","answers":[{"ID":"10833","answer":"False","correct":"1"},{"ID":"10832","answer":"True","correct":"0"}]},{"question":"3. If there was a fiscal rule imposed such that the national government had to balance its fiscal position at all times then this would also eliminate the sensitivity of the outcome to the automatic stabilisers.","ID":"2156","explanation":"","answers":[{"ID":"10835","answer":"False","correct":"1"},{"ID":"10834","answer":"True","correct":"0"}]}]}, {"ID":"582","name":"Quiz 2020 - 20","added_on":"2020-05-14 22:46:40","questions":[{"question":"1. If the national government stopped issuing public debt then its deficit spending would be no more expansionary than the current practice of non-government bank reserves through debt issuance.","ID":"2157","explanation":"","answers":[{"ID":"10843","answer":"False","correct":"0"},{"ID":"10842","answer":"True","correct":"1"}]},{"question":"2. Non-government sector net worth does not immediately change when the government issues debt which exactly matches ($-for-$) the increase in net public spending.","ID":"2158","explanation":"","answers":[{"ID":"10845","answer":"False","correct":"0"},{"ID":"10844","answer":"True","correct":"1"},{"ID":"10846","answer":"Depends on whether interest is paid on Excess reserves","correct":"0"}]},{"question":"3. If net exports are contributing to economic growth, then the national government may have the room to run a fiscal surplus without impeding that growth.","ID":"2159","explanation":"","answers":[{"ID":"10848","answer":"False","correct":"0"},{"ID":"10847","answer":"True","correct":"1"}]}]}, {"ID":"583","name":"Quiz 2020 - 21","added_on":"2020-05-21 23:45:17","questions":[{"question":"1. Modern Monetary Theory (MMT) refutes the claim that government spending can crowd out private spending.","ID":"2160","explanation":"","answers":[{"ID":"10856","answer":"False","correct":"1"},{"ID":"10855","answer":"True","correct":"0"}]},{"question":"2. In general, the OECD and IMF estimates of the impact of the automatic stabilisers in-built into fiscal policy are biased downwards.","ID":"2161","explanation":"","answers":[{"ID":"10858","answer":"False","correct":"0"},{"ID":"10857","answer":"True ","correct":"1"}]},{"question":"3. When a government runs a continuous fiscal deficit public spending builds up over time and eventually exposes the economy to inflation risk.","ID":"2162","explanation":"","answers":[{"ID":"10860","answer":"False","correct":"1"},{"ID":"10859","answer":"True","correct":"0"}]}]}, {"ID":"584","name":"Quiz 2020 - 22","added_on":"2020-05-28 22:31:10","questions":[{"question":"1. When an economy is running a current account deficit, national income movements will ensure that only one of the two remaining sectors (government and private domestic) ends up spending less than they receive, irrespective of the GDP growth rate.","ID":"2163","explanation":"","answers":[{"ID":"10868","answer":"False","correct":"0"},{"ID":"10867","answer":"True","correct":"1"}]},{"question":"2. Unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government debt, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"2164","explanation":"","answers":[{"ID":"10870","answer":"False","correct":"1"},{"ID":"10869","answer":"True ","correct":"0"}]},{"question":"3. Standing facilities (credit lines etc) that central banks maintain means that the monetary base always adjusts to the changes in the money supply.","ID":"2165","explanation":"","answers":[{"ID":"10872","answer":"False","correct":"0"},{"ID":"10871","answer":"True","correct":"1"}]}]}, {"ID":"585","name":"Quiz 2020 - 23","added_on":"2020-06-04 05:41:59","questions":[{"question":"1. The private domestic sector can save overall even if the government fiscal balance is in surplus as long as net exports are positive.","ID":"2166","explanation":"","answers":[{"ID":"10886","answer":"False","correct":"1"},{"ID":"10885","answer":"True","correct":"0"}]},{"question":"2. When the central bank purchases government bonds in the secondary bond market, it has the equivalent impact on financial assets in the non-government sector as if a fiscal deficit, which increased reserves by the same amount would have.n","ID":"2167","explanation":"","answers":[{"ID":"10882","answer":"False","correct":"1"},{"ID":"10881","answer":"True","correct":"0"}]},{"question":"3. While continuous national governments deficits are possible if the non-government sector desires to save overall, they do imply continuously rising public debt levels under current institutional arrangements.","ID":"2168","explanation":"","answers":[{"ID":"10884","answer":"False","correct":"0"},{"ID":"10883","answer":"True","correct":"1"}]}]}, {"ID":"586","name":"Quiz 2020 - 24","added_on":"2020-06-11 20:44:57","questions":[{"question":"1. The issuance of bonds by a currency-issuing government to match its net spending (fiscal deficit) augments the nominal wealth held by the non-government sector.","ID":"2169","explanation":"","answers":[{"ID":"10894","answer":"False","correct":"1"},{"ID":"10893","answer":"True","correct":"0"}]},{"question":"2. When a country runs a small current account deficit and the private domestic sector is saving overall, the government fiscal balance will always be in deficit.","ID":"2170","explanation":"","answers":[{"ID":"10898","answer":"False","correct":"0"},{"ID":"10897","answer":"True","correct":"1"}]},{"question":"3. When discussing cuts to discretionary national fiscal positions, progressive voices typically support imposing tax increases while conservatives recommend spending cuts and privatisation. In terms of the initial impact on national income, which policy option will be more damaging - a tax increase which aims to increase tax revenue at the current level of national income by $x or a spending cut of $x?","ID":"2171","explanation":"","answers":[{"ID":"10899","answer":"Tax increase","correct":"0"},{"ID":"10900","answer":"Spending cut","correct":"1"},{"ID":"10901","answer":"Both will have the same impact","correct":"0"},{"ID":"10902","answer":"There is not enough information to answer the question","correct":"0"}]}]}, {"ID":"587","name":"Quiz 2020 - 25","added_on":"2020-06-18 06:06:14","questions":[{"question":"1. If the current account (on balance of payments) is in deficit and household saving increases as a proportion of disposable income then the government could still run a fiscal surplus without a decline in output and income occurring.","ID":"2172","explanation":"","answers":[{"ID":"10910","answer":"False","correct":"0"},{"ID":"10909","answer":"True","correct":"1"}]},{"question":"2. Politics aside, the central bank can still increase interest rates even if it was legislatively required to directly purchase treasury debt to match the national governments fiscal deficit.","ID":"2173","explanation":"","answers":[{"ID":"10912","answer":"False","correct":"0"},{"ID":"10911","answer":"True ","correct":"1"}]},{"question":"3. Domestic deflation (reducing domestic wages and prices relative to other nations), which Eurozone nations are prone to pursue because they have no exchange rate flexibility, may not increase export competitiveness.","ID":"2174","explanation":"","answers":[{"ID":"10916","answer":"False","correct":"0"},{"ID":"10915","answer":"True","correct":"1"}]}]}, {"ID":"588","name":"Quiz 2020 - 26","added_on":"2020-06-25 21:41:31","questions":[{"question":"1. National accounting shows us that a government surplus equals a non-government deficit. If fiscal austerity does generate fiscal surpluses it does so by swapping public for private debt.","ID":"2175","explanation":"","answers":[{"ID":"10930","answer":"False","correct":"1"},{"ID":"10929","answer":"True","correct":"0"}]},{"question":"2. In a stock-flow consistent macroeconomics, the sectoral balance stocks all sum to zero.","ID":"2176","explanation":"","answers":[{"ID":"10924","answer":"False","correct":"1"},{"ID":"10923","answer":"True","correct":"0"}]},{"question":"3. Public spending can \\\"crowd out\\\" private spending.","ID":"2177","explanation":"","answers":[{"ID":"10926","answer":"False","correct":"0"},{"ID":"10925","answer":"True","correct":"1"}]}]}, {"ID":"589","name":"Quiz 2020 - 27","added_on":"2020-07-02 22:59:05","questions":[{"question":"1. A rising household saving ratio combined with an external deficit that is draining aggregate demand, means that the fiscal deficit has to rise to maintain current output growth. ","ID":"2178","explanation":"","answers":[{"ID":"10938","answer":"False","correct":"1"},{"ID":"10937","answer":"True","correct":"0"}]},{"question":"2. Assume that total employment grew in a particular month in net terms yet unemployment still rose. You also know that the labour force participation rate fell marginally. Taken together this information tells you that:","ID":"2179","explanation":"","answers":[{"ID":"10946","answer":"The labour force grew faster than employment but you cannot tell what happened to the working age population from the information provided.","correct":"0"},{"ID":"10945","answer":"The working age population grew faster than employment and offset the decline in the labour forcen","correct":"0"},{"ID":"10944","answer":"Labour force growth outstripped employment growth but was less than the growth in the working age population.","correct":"1"}]},{"question":"3. The European Commission has temporarily relaxed the fiscal restrictions on national governments that are applicable under the Stability and Growth Pact, which means that the solvency risk facing several EMU members is also temporarily resolved.","ID":"2180","explanation":"","answers":[{"ID":"10943","answer":"False","correct":"1"},{"ID":"10942","answer":"True","correct":"0"}]}]}, {"ID":"590","name":"Quiz 2020 - 28","added_on":"2020-07-09 23:18:55","questions":[{"question":"1. Larger fiscal deficits as a percentage of GDP reduce the local productive resources that are available to the private sector.","ID":"2181","explanation":"","answers":[{"ID":"10954","answer":"False","correct":"0"},{"ID":"10953","answer":"True","correct":"1"}]},{"question":"2. A national government that issues its own currency and freely floats it on foreign markets never faces a risk of insolvency.","ID":"2182","explanation":"","answers":[{"ID":"10956","answer":"False","correct":"1"},{"ID":"10955","answer":"True","correct":"0"}]},{"question":"3. Assume the government increases spending by $100 billion from now and maintains that injection for three years. Economists estimate the spending multiplier to be 1.6 and the impact is immediate and exhausted in each year; imports rise by 20 cents for every dollar generated in the economy; and the current tax rate is equal to 20 per cent. They also estimate that the tax multiplier (impact of tax changes on income) to be equal to 1. Which of the following statements is correct?","ID":"2183","explanation":"","answers":[{"ID":"10957","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $480 billion and the private sector saves 24 cents out of every extra disposable dollar generated.","correct":"0"},{"ID":"10958","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $480 billion and the private sector saves 28 cents out of every extra dollar disposable generated.n","correct":"1"},{"ID":"10959","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $384 billion and the private sector saves 28 cents out of every extra dollar disposable generated.","correct":"0"},{"ID":"10960","answer":"The cumulative impact of this fiscal expansion on nominal GDP is $384 billion and the private sector saves 28 cents out of every extra dollar disposable generated.","correct":"0"}]}]}, {"ID":"591","name":"Quiz 2020 - 29","added_on":"2020-07-16 23:13:06","questions":[{"question":"1. The automatic stabilisers built into the fiscal framework operate in a counter-cyclical fashion and ensure that the government fiscal balance, which rises during a recession, returns to its appropriate level once growth resumes.","ID":"2184","explanation":"","answers":[{"ID":"10968","answer":"False","correct":"1"},{"ID":"10967","answer":"True","correct":"0"}]},{"question":"2. If we observe falling government bond yields then we can assume that investors are viewing sovereign debt less favourably.","ID":"2185","explanation":"","answers":[{"ID":"10970","answer":"False","correct":"1"},{"ID":"10969","answer":"True","correct":"0"}]},{"question":"3. If private domestic investment is less than private domestic saving and the external account is draining aggregate demand then the government fiscal balance will always be in deficit no matter what level of GDP is produced.","ID":"2186","explanation":"","answers":[{"ID":"10972","answer":"False","correct":"0"},{"ID":"10971","answer":"True ","correct":"1"}]}]}, {"ID":"592","name":"Quiz 2020 - 30","added_on":"2020-07-23 21:59:52","questions":[{"question":"1. The difference between a situation where the government runs a deficit and matches it with debt-issuance to the non-government sector to a situation where debt is only issued to the central bank is that non-government sector financial wealth rises in the first case.","ID":"2187","explanation":"","answers":[{"ID":"10986","answer":"False","correct":"1"},{"ID":"10985","answer":"True","correct":"0"}]},{"question":"2. If net exports are running at 2 per cent of GDP, and the private domestic sector is saving overall an equivalent of 3 per cent of GDP, the government must be running a surplus equal to 1 per cent of GDP.","ID":"2188","explanation":"","answers":[{"ID":"10982","answer":"False","correct":"1"},{"ID":"10981","answer":"True","correct":"0"}]},{"question":"3. To reduce the public debt ratio, the government has to eventually run primary fiscal surpluses (that is, spend less than they raise in taxes net of interest payments on past debt).","ID":"2189","explanation":"","answers":[{"ID":"10984","answer":"False","correct":"1"},{"ID":"10983","answer":"True","correct":"0"}]}]}, {"ID":"593","name":"Quiz 2020 - 31","added_on":"2020-07-30 21:46:41","questions":[{"question":"1. Which scenario represents a more expansionary outcome:","ID":"2190","explanation":"","answers":[{"ID":"10993","answer":"A fiscal deficit equivalent to 5 per cent of GDP (including the impact of automatic stabilisers equivalent to 3 per cent of GDP).","correct":"1"},{"ID":"10994","answer":"A fiscal deficit equivalent to 3 per cent of GDP.","correct":"0"},{"ID":"10995","answer":"You cannot tell because you do not know the decomposition between the cyclical and structural components in Option (B)","correct":"0"}]},{"question":"2. Fiscal austerity (manifesting as a fiscal surplus) will not damage economic growth if the external balance is in surplus and adding net spending to the economy.","ID":"2191","explanation":"","answers":[{"ID":"10997","answer":"False","correct":"1"},{"ID":"10996","answer":"True","correct":"0"}]},{"question":"3. In the context of population ageing, the fact that a sovereign government is never financially constrained means that it can always provide first-class health care to its citizens.","ID":"2192","explanation":"","answers":[{"ID":"10999","answer":"False","correct":"1"},{"ID":"10998","answer":"True","correct":"0"}]}]}, {"ID":"594","name":"Quiz 2020 - 32","added_on":"2020-08-06 23:02:30","questions":[{"question":"1. If the nation is running a current account deficit of 2 per cent of GDP and the government runs a surplus equal to 2 per cent of GDP, then we know that at the current level of GDP, the private domestic sector is spending more than they are earning.","ID":"2193","explanation":"","answers":[{"ID":"11013","answer":"False","correct":"0"},{"ID":"11012","answer":"True","correct":"1"}]},{"question":"2. In a stock-flow consistent macroeconomics, we know that flows during a period add to relevant stocks. Accordingly, if the flow of government spending rose by $100 billion in total, then if nothing else changes the stock of aggregate demand would also rise by $100 billion in the first instance (before the multiplier starts to work).","ID":"2194","explanation":"","answers":[{"ID":"11009","answer":"False","correct":"1"},{"ID":"11008","answer":"True","correct":"0"}]},{"question":"3. Modern Monetary Theory (MMT) demonstrates that mass unemployment arises from deficient aggregate demand which calls for an increase in the fiscal deficit to correct the deficiency. This observation is totally at odds with the mainstream view that unemployment can be reduced by cutting real wages relative to productivity.","ID":"2195","explanation":"","answers":[{"ID":"11011","answer":"False","correct":"1"},{"ID":"11010","answer":"True","correct":"0"}]}]}, {"ID":"595","name":"Quiz 2020 - 33","added_on":"2020-08-11 23:23:00","questions":[{"question":"1. Ignoring any reserve requirements that might be imposed, if the central bank pays a positive interest rate on overnight reserves held by the commercial banks then it may still have to conduct open market operations as a means of ensuring that levels of bank reserves are consistent with its policy target rate of interest.","ID":"2196","explanation":"","answers":[{"ID":"11021","answer":"False","correct":"0"},{"ID":"11020","answer":"True","correct":"1"}]},{"question":"2. If participation rates are constant, percentage unemployment will not change as long as employment growth matches the pace of growth in the working age population (people above 15 years of age).","ID":"2197","explanation":"","answers":[{"ID":"11023","answer":"False","correct":"0"},{"ID":"11022","answer":"True","correct":"1"}]},{"question":"3. Mainstream monetary theory highlights the concept of a money multiplier which says that the money supply is some multiple of the monetary base (bank reserves and currency). There is a direct relationship between the monetary base and the broad money supply in a modern monetary economy.","ID":"2198","explanation":"","answers":[{"ID":"11025","answer":"False","correct":"0"},{"ID":"11024","answer":"True","correct":"1"}]}]}, {"ID":"596","name":"Quiz 2020 - 34","added_on":"2020-08-20 23:00:18","questions":[{"question":"1. The role of the automatic stabilisers are to adjust government net spending in a counter-cyclical fashion to ensure that the government fiscal balance will rise during a recession to support the economy and then return to its appropriate level once growth resumes.","ID":"2199","explanation":"","answers":[{"ID":"11033","answer":"False","correct":"1"},{"ID":"11032","answer":"True","correct":"0"}]},{"question":"2. If a nation runs continuous fiscal deficits, the risk is that the accumulation of spending will eventually add to inflationary pressures.","ID":"2200","explanation":"","answers":[{"ID":"11035","answer":"False","correct":"1"},{"ID":"11034","answer":"True","correct":"0"}]},{"question":"3. If private domestic investment is less than private domestic saving and the current account is in deficit, then the government fiscal balance will be in deficit no matter what level of GDP is produced.","ID":"2201","explanation":"","answers":[{"ID":"11037","answer":"False","correct":"0"},{"ID":"11036","answer":"True","correct":"1"}]}]}, {"ID":"597","name":"Quiz 2020 - 35","added_on":"2020-08-26 20:48:10","questions":[{"question":"1. If the inflation rate is steady and the central bank maintains a constant nominal interest rate, then the public debt ratio will rise if the government deficit doubles, not that that observation is of any concern.","ID":"2202","explanation":"","answers":[{"ID":"11045","answer":"False","correct":"1"},{"ID":"11044","answer":"True","correct":"0"}]},{"question":"2. Real wage increases require the rate of growth in earnings to be faster than labour productivity growth.","ID":"2203","explanation":"","answers":[{"ID":"11047","answer":"False","correct":"1"},{"ID":"11046","answer":"True","correct":"0"}]},{"question":"3. A fiscal surplus indicates that the national government is trying to slow the economy down and contain inflation.","ID":"2204","explanation":"","answers":[{"ID":"11049","answer":"False","correct":"1"},{"ID":"11048","answer":"True","correct":"0"}]}]}, {"ID":"598","name":"Quiz 2020 - 36","added_on":"2020-09-03 21:50:25","questions":[{"question":"1. When a currency-issuing government voluntarily constrains itself to borrow from the private sector to cover its deficit spending, it logically reduces the funds available for private investment expenditure.","ID":"2205","explanation":"","answers":[{"ID":"11050","answer":"True","correct":"0"},{"ID":"11051","answer":"False","correct":"1"}]},{"question":"2. An increasing fiscal deficit tells us nothing about the government"s policy intentions.","ID":"2206","explanation":"","answers":[{"ID":"11052","answer":"True","correct":"1"},{"ID":"11053","answer":"False","correct":"0"}]},{"question":"3. The crucial difference between a monetary system based on the convertible currency backed by gold and a fiat currency monetary is that under the former system:","ID":"2207","explanation":"","answers":[{"ID":"11054","answer":"excessive national government spending led to inflation.","correct":"0"},{"ID":"11055","answer":"the national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"11056","answer":"the national government could not use net spending to achieve full employment.","correct":"0"}]}]}, {"ID":"599","name":"Quiz 2020 - 37","added_on":"2020-09-10 04:30:24","questions":[{"question":"1. A rising fiscal surplus tells us that the government is imposing austerity on the economy.","ID":"2211","explanation":"","answers":[{"ID":"11069","answer":"True","correct":"0"},{"ID":"11070","answer":"False","correct":"1"}]},{"question":"2. If the household saving ratio rises and there is an external deficit then government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"2212","explanation":"","answers":[{"ID":"11071","answer":"True","correct":"0"},{"ID":"11072","answer":"False","correct":"1"}]},{"question":"3. Real government spending can be higher if the government can raise more tax revenue by increasing tax rates.","ID":"2213","explanation":"","answers":[{"ID":"11073","answer":"True","correct":"1"},{"ID":"11074","answer":"False","correct":"0"}]}]}, {"ID":"600","name":"Quiz 2020 - 38","added_on":"2020-09-17 22:06:27","questions":[{"question":"1. Modern Monetary Theory accepts the proposition that if the central bank continually expands the monetary base then there will inevitably be an accelerating inflation.","ID":"2214","explanation":"","answers":[{"ID":"11082","answer":"False","correct":"1"},{"ID":"11081","answer":"True","correct":"0"}]},{"question":"2. If there is an external deficit of 2 per cent of GDP and the government balances its fiscal position then private capital formation:","ID":"2215","explanation":"","answers":[{"ID":"11083","answer":"Will outstrip private domestic saving by a margin equal to 2 per cent of GDP.","correct":"1"},{"ID":"11084","answer":"Will be less than private domestic saving by a margin equal to 2 per cent of GDP.","correct":"0"},{"ID":"11085","answer":"Cannot really tell definitively without further information.","correct":"0"}]},{"question":"3. While a currency-issuing government does not need to issue to debt in order to raise funds prior to spending, one effect of draining funds out of the system by borrowing from the private sector is that it reduces the risk that public spending will overheat the economy.","ID":"2216","explanation":"","answers":[{"ID":"11087","answer":"False","correct":"1"},{"ID":"11086","answer":"True","correct":"0"}]}]}, {"ID":"601","name":"Quiz 2020 - 39","added_on":"2020-09-24 06:49:20","questions":[{"question":"1. Imagine we forecast real GDP growth for a nation to grow by 0.8 per cent in 2021 and 1.1 per cent in 2022. We also predict that the unemployment rate would fall from 11.7 per cent in 2021 to 11.4 per cent in 2022. Additionally, average annual growth in labour productivity has been running at just over 1 per cent per annum (GDP per hours worked). If average weekly hours worked remains constant over 2022, then the implication of our forecasts is that we think the labour force of this nation in 2022 will:nnnnn","ID":"2217","explanation":"","answers":[{"ID":"11094","answer":"grow by 0.2 per cent.","correct":"0"},{"ID":"11095","answer":"shrink by 0.2 per cent.","correct":"1"},{"ID":"11096","answer":"grow by 0.1 per cent.","correct":"0"},{"ID":"11097","answer":"shrink by 0.1 per cent.","correct":"0"}]},{"question":"2. If the stock of aggregate demand growth outstrips the capacity of the productive sector to respond by producing extra real goods and services then inflation is inevitable.","ID":"2218","explanation":"","answers":[{"ID":"11099","answer":"False","correct":"1"},{"ID":"11098","answer":"True","correct":"0"}]},{"question":"3. National accounting shows us that a government surplus equals a non-government deficit. If a government is successful in achieving a fiscal surplus then the private domestic sector will ultimately become more indebted as a consequence, which means that austerity amounts to swapping public for private debt.","ID":"2219","explanation":"","answers":[{"ID":"11103","answer":"False","correct":"1"},{"ID":"11102","answer":"True","correct":"0"}]}]}, {"ID":"602","name":"Quiz 2020 - 40","added_on":"2020-10-01 21:39:21","questions":[{"question":"1. Modern Monetary Theory (MMT) teaches us that a sovereign government does not have to issue debt to finance its spending. But the more public debt it voluntarily issues:","ID":"2220","explanation":"","answers":[{"ID":"11110","answer":"the less is the volume of investment funds in the non-government sector that can be used for other investments.","correct":"0"},{"ID":"11111","answer":"the greater is non-government wealth held in the form of public debt.","correct":"1"},{"ID":"11112","answer":"the more difficult it is for banks to attract deposits to initiate loans from.","correct":"0"}]},{"question":"2. A fiscal surplus indicates that the national government is:","ID":"2221","explanation":"","answers":[{"ID":"11113","answer":"trying to slow the economy down and contain inflation.","correct":"0"},{"ID":"11114","answer":"trying to reduce public debt.","correct":"0"},{"ID":"11115","answer":"you cannot conclude anything about the government"s policy intentions.","correct":"1"}]},{"question":"3. A currency-issuing government that runs a balanced fiscal balance over the economic cycle (peak to peak) must accept that after all the spending adjustments are exhausted, the private domestic balance will average a surplus over the same cycle, if the external balance averages a surplus over the same cycle.","ID":"2222","explanation":"","answers":[{"ID":"11117","answer":"False","correct":"0"},{"ID":"11116","answer":"True","correct":"1"}]}]}, {"ID":"603","name":"Quiz 2020 - 41","added_on":"2020-10-08 20:49:44","questions":[{"question":"1. Nation A is running a small current account deficit and its private domestic sector is saving overall. Nation B has a smaller external deficit (relative to its GDP) but its private domestic sector is balancing its spending and income. The governments in both Nations have to be running deficits. ","ID":"2223","explanation":"","answers":[{"ID":"11127","answer":"False","correct":"0"},{"ID":"11126","answer":"True","correct":"1"},{"ID":"11128","answer":"Not enough information to answer","correct":"0"}]},{"question":"2. One consequence (perhaps an advantage) of the government issuing bonds to the non-government sector to match its deficit over the alternative of not issuing any new debt, is that the non-government sector is immediately wealthier as a consequence.","ID":"2224","explanation":"","answers":[{"ID":"11134","answer":"False","correct":"1"},{"ID":"11133","answer":"True","correct":"0"}]},{"question":"3. The wage share in national income in Australia fell below 50 per cent in the June-quarter 2020. This means that the real wage fell.","ID":"2225","explanation":"","answers":[{"ID":"11132","answer":"False","correct":"1"},{"ID":"11131","answer":"True","correct":"0"}]}]}, {"ID":"605","name":"Quiz 2020 - 42","added_on":"2020-10-15 16:58:18","questions":[{"question":"1. Under current public sector debt-issuance arrangements (where sovereign governments match their deficits with issues of debt), the government and the private domestic sector cannot simultaneously spend less than they earn.","ID":"2226","explanation":"","answers":[{"ID":"11148","answer":"False","correct":"1"},{"ID":"11147","answer":"True ","correct":"0"}]},{"question":"2. The estimates provided by institutions such as the OECD and the IMF of the size of the automatic stabilisers are typically biased downwards.","ID":"2227","explanation":"","answers":[{"ID":"11144","answer":"False","correct":"0"},{"ID":"11143","answer":"True ","correct":"1"}]},{"question":"3. Governments concerned with their public debt ratio should encourage growth because the ratio will fall once economic growth resumes.","ID":"2228","explanation":"","answers":[{"ID":"11146","answer":"False","correct":"1"},{"ID":"11145","answer":"True","correct":"0"}]}]}, {"ID":"606","name":"Quiz 2020 - 43","added_on":"2020-10-22 02:37:26","questions":[{"question":"1. Only one of the following propositions is possible for a nation over any given period (with all balances expressed as a per cent of GDP):","ID":"2229","explanation":"","answers":[{"ID":"11157","answer":"An external deficit accompanied by a public surplus of equal size and the private domestic sector saving overall.","correct":"0"},{"ID":"11158","answer":"An external deficit accompanied by a public surplus of equal size and the private domestic sector dis-saving overall.","correct":"1"},{"ID":"11159","answer":"An external deficit accompanied by a larger public surplus and the private domestic sector saving overall.","correct":"0"}]},{"question":"2. If in attempting to estimate the cyclical component of a government fiscal outcome we underestimate the potential capacity of an economy, we will conclude that the government"s discretionary fiscal position is less expansionary than it actually is.","ID":"2230","explanation":"","answers":[{"ID":"11156","answer":"False","correct":"1"},{"ID":"11155","answer":"True ","correct":"0"}]},{"question":"3. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.","ID":"2231","explanation":"","answers":[{"ID":"11161","answer":"False","correct":"1"},{"ID":"11160","answer":"True","correct":"0"}]}]}, {"ID":"607","name":"Quiz 2020 - 44","added_on":"2020-10-29 22:01:50","questions":[{"question":"1. Assuming the expenditure multiplier is greater than 1, if the government increases its deficit they will have a greatest impact on aggregate demand if there are no offsetting monetary operations by the central bank (government bond sales) draining the excess reserves created.","ID":"2232","explanation":"","answers":[{"ID":"11169","answer":"False","correct":"1"},{"ID":"11168","answer":"True","correct":"0"}]},{"question":"2. If the government achieves in reducing its fiscal deficit by say $10 billion, the net financial assets destroyed by this withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"2233","explanation":"","answers":[{"ID":"11171","answer":"False","correct":"1"},{"ID":"11170","answer":"True","correct":"0"}]},{"question":"3. Which government deficit outcome is the most expansionary?n","ID":"2234","explanation":"","answers":[{"ID":"11172","answer":"1 per cent of GDP.","correct":"0"},{"ID":"11173","answer":"2 per cent of GDP.","correct":"0"},{"ID":"11174","answer":"3 per cent of GDP.","correct":"1"},{"ID":"11175","answer":"Cannot tell because it depends on the decomposition of the structural and cyclical components.","correct":"0"}]}]}, {"ID":"608","name":"Quiz 2020 - 45","added_on":"2020-11-05 18:45:30","questions":[{"question":"1. Using national accounting rules which dictate that the government balance is always equal to the non-government balance with an opposite sign, we can conclude that if the public sector successfully achieves a fiscal surplus then the private domestic sector must be spending more than it is earning.","ID":"2235","explanation":"","answers":[{"ID":"11183","answer":"False","correct":"1"},{"ID":"11182","answer":"True","correct":"0"}]},{"question":"2. If all the spending in the economy creates a stock of aggregate spending which exceeds the capacity of the productive sector to respond by producing extra real goods and services then inflation is inevitable.","ID":"2236","explanation":"","answers":[{"ID":"11185","answer":"False","correct":"1"},{"ID":"11184","answer":"True","correct":"0"}]},{"question":"3. Assume that the government increases spending by $200 billion at the start of each year and maintains this policy for the next three years from now. Economists estimate the spending multiplier to be 2 and the impact is exhausted within each year (all induced consumption is completed within 12 months). The tax multiplier is estimated to be equal to 1 and the current average tax rate is equal to 25 per cent (so tax revenue rises by 25 cents for every extra dollar of GDP produced ). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"2237","explanation":"","answers":[{"ID":"11187","answer":"$400","correct":"0"},{"ID":"11186","answer":"$1200","correct":"1"},{"ID":"11188","answer":"$300","correct":"0"},{"ID":"11189","answer":"$900","correct":"0"}]}]}, {"ID":"609","name":"Quiz 2020 - 46","added_on":"2020-11-12 03:05:41","questions":[{"question":"1. Assuming the expenditure multiplier is greater than 1, if the government increases its deficit, the net spending injection will have a greatest impact on aggregate spending if there are no offsetting monetary operations by the central bank (government bond sales) draining the excess reserves created.","ID":"2238","explanation":"","answers":[{"ID":"11197","answer":"False","correct":"1"},{"ID":"11196","answer":"True","correct":"0"}]},{"question":"2. If the government achieves its aim of reducing its fiscal deficit by say $10 billion, the net financial assets destroyed by this withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"2239","explanation":"","answers":[{"ID":"11199","answer":"False","correct":"1"},{"ID":"11198","answer":"True","correct":"0"}]},{"question":"3. Which government deficit outcome is the most expansionary?","ID":"2240","explanation":"","answers":[{"ID":"11200","answer":"1 per cent of GDP.","correct":"0"},{"ID":"11201","answer":"2 per cent of GDP.","correct":"0"},{"ID":"11202","answer":"3 per cent of GDP.","correct":"1"},{"ID":"11203","answer":"Cannot tell because it depends on the decomposition of the structural and cyclical components.","correct":"0"}]}]}, {"ID":"610","name":"Quiz 2020 - 47","added_on":"2020-11-19 18:04:53","questions":[{"question":"1. A nation can run a government sector surplus, which is larger as a proportion to GDP than the external deficit, while the private domestic sector is spending more than they are earning.","ID":"2241","explanation":"","answers":[{"ID":"11211","answer":"False","correct":"0"},{"ID":"11210","answer":"True","correct":"1"}]},{"question":"2. The automatic stabilisers built into national government fiscal policy always operate in a counter-cyclical manner.","ID":"2242","explanation":"","answers":[{"ID":"11213","answer":"False","correct":"0"},{"ID":"11212","answer":"True","correct":"1"}]},{"question":"3. Sovereign government spending becomes more costly when the bond markets push yields on new public bond issues up.","ID":"2243","explanation":"","answers":[{"ID":"11215","answer":"False","correct":"1"},{"ID":"11214","answer":"True ","correct":"0"}]}]}, {"ID":"611","name":"Quiz 2020 - 48","added_on":"2020-11-26 03:37:23","questions":[{"question":"1. The distinction between structural and the cyclical components of the final government balance helps us to determine the direction of the discretionary fiscal policy stance of the government. In that context, which of the following situations represents the more expansionary outcome:","ID":"2244","explanation":"","answers":[{"ID":"11222","answer":"A government deficit equivalent to 5 per cent of GDP.nn","correct":"1"},{"ID":"11223","answer":"A government deficit equivalent to 3 per cent of GDP.","correct":"0"},{"ID":"11224","answer":"You cannot tell because you do not know the decomposition between the cyclical and structural components.","correct":"0"}]},{"question":"2. If private domestic investment is greater than private domestic saving and the current account is in deficit then the government balance has to be in deficit at all levels of GDP.","ID":"2245","explanation":"","answers":[{"ID":"11230","answer":"False","correct":"1"},{"ID":"11229","answer":"True","correct":"0"}]},{"question":"3. If a central bank uses \\\"overt monetary financing\\\" (OMF) to support the net public spending, it would still require debt issuance if they wanted to target a non-zero policy interest rate.","ID":"2246","explanation":"","answers":[{"ID":"11228","answer":"False","correct":"1"},{"ID":"11227","answer":"True","correct":"0"}]}]}, {"ID":"612","name":"Quiz 2020 - 49","added_on":"2020-12-04 02:40:17","questions":[{"question":"1. This week"s Australian National Accounts data saw the wage share fall further to 49 per cent, a record low. If workers cannot maintain nominal wages growth equal to the growth in labour productivity, then their real wages fall.","ID":"2247","explanation":"","answers":[{"ID":"11240","answer":"False","correct":"1"},{"ID":"11239","answer":"True","correct":"0"}]},{"question":"2. Assume the central bank keeps the inflation rate steady and equal to the nominal interest rate. Under these monetary conditions, a government can push the primary fiscal balance (the difference between spending and taxation net interest payments) into surplus and drive down the public debt ratio even if the fiscal austerity causes a recession.","ID":"2248","explanation":"","answers":[{"ID":"11244","answer":"False","correct":"0"},{"ID":"11243","answer":"True","correct":"1"}]},{"question":"3. Suppose a government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private domestic sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.","ID":"2249","explanation":"","answers":[{"ID":"11242","answer":"False","correct":"0"},{"ID":"11241","answer":"True","correct":"1"}]}]}, {"ID":"613","name":"Quiz 2020 - 50","added_on":"2020-12-10 19:16:22","questions":[{"question":"1. A public works program that digs holes and fills them in again has exactly the same impact on current economic growth ($-for-$) as a private investment plan which constructs a new factory.","ID":"2250","explanation":"","answers":[{"ID":"11252","answer":"False","correct":"0"},{"ID":"11251","answer":"True","correct":"1"}]},{"question":"2. The automatic stabilisers increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the fiscal outcome to the economic cycle could be eliminated if the government followed a fiscal rule such that it had to balance its fiscal position at all times.","ID":"2251","explanation":"","answers":[{"ID":"11254","answer":"False","correct":"1"},{"ID":"11253","answer":"True","correct":"0"}]},{"question":"3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.","ID":"2252","explanation":"","answers":[{"ID":"11256","answer":"False","correct":"0"},{"ID":"11255","answer":"True","correct":"1"}]}]}, {"ID":"614","name":"Quiz 2020 - 51","added_on":"2020-12-16 04:49:42","questions":[{"question":"1. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.","ID":"2253","explanation":"","answers":[{"ID":"11257","answer":"True","correct":"0"},{"ID":"11258","answer":"False","correct":"1"}]},{"question":"2. A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they are earning.","ID":"2254","explanation":"","answers":[{"ID":"11264","answer":"False","correct":"0"},{"ID":"11263","answer":"True","correct":"1"}]},{"question":"3. Government deficit spending would have a greater immediate expansionary impact on aggregate spending if the central bank bought the public debt to match the deficit instead of a situation where the government matches it deficit by issuing debt to the private sector.","ID":"2255","explanation":"","answers":[{"ID":"11261","answer":"True","correct":"0"},{"ID":"11262","answer":"False","correct":"1"}]}]}, {"ID":"615","name":"Quiz 2020 - 52","added_on":"2020-12-24 05:37:27","questions":[{"question":"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.","ID":"2256","explanation":"","answers":[{"ID":"11284","answer":"False","correct":"1"},{"ID":"11283","answer":"True","correct":"0"}]},{"question":"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.","ID":"2257","explanation":"","answers":[{"ID":"11279","answer":"False","correct":"1"},{"ID":"11278","answer":"True","correct":"0"}]},{"question":"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.","ID":"2258","explanation":"","answers":[{"ID":"11277","answer":"False","correct":"0"},{"ID":"11276","answer":"True","correct":"1"}]},{"question":"4. Special Xmas Question: Santa is having trouble keeping his sled and related delivery infrastructure in working order. But he knows:","ID":"2259","explanation":"","answers":[{"ID":"11288","answer":"that he is a household and will have to save, earn or borrow to generate the funds necessary for maintenance","correct":"1"},{"ID":"11289","answer":"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.","correct":"0"}]}]}, {"ID":"616","name":"Quiz 2021 - 1","added_on":"2020-12-31 16:39:05","questions":[{"question":"1. Quantitative easing and an expansion of net public spending both add net financial assets to the non-government sector but the former aims to stimulate demand by lowering interest rates while the latter policy choice more directly adds demand to the system.","ID":"2260","explanation":"","answers":[{"ID":"11297","answer":"False","correct":"1"},{"ID":"11296","answer":"True","correct":"0"}]},{"question":"2. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"2261","explanation":"","answers":[{"ID":"11299","answer":"False","correct":"1"},{"ID":"11298","answer":"True","correct":"0"}]},{"question":"3. When a government such as the US or Australian government voluntarily decides to issue debt to the private sector to match its net spending position (deficit), it soaks up funds and restricts the capacity for private investment projects.","ID":"2262","explanation":"","answers":[{"ID":"11301","answer":"False","correct":"1"},{"ID":"11300","answer":"True","correct":"0"}]}]}, {"ID":"617","name":"Quiz 2021 - 2","added_on":"2021-01-07 19:27:23","questions":[{"question":"1. Widening the tax base provides the government with more capacity to spend.","ID":"2263","explanation":"","answers":[{"ID":"11309","answer":"False","correct":"0"},{"ID":"11308","answer":"True","correct":"1"}]},{"question":"2. If there is an external deficit, and the private domestic sector successfully increases its overall saving as a percentage of GDP, then income adjustments will always ensure the government fiscal balance is in deficit.","ID":"2264","explanation":"","answers":[{"ID":"11311","answer":"False","correct":"0"},{"ID":"11310","answer":"True","correct":"1"}]},{"question":"3. Estimates of structural fiscal deficits published the multilateral agencies such as the IMF and the OECD are to be treated with suspicion because they are based on excessively optimistic estimates of potential GDP.","ID":"2265","explanation":"","answers":[{"ID":"11313","answer":"False","correct":"1"},{"ID":"11312","answer":"True","correct":"0"}]}]}, {"ID":"618","name":"Quiz 2021 - 3","added_on":"2021-01-14 20:16:58","questions":[{"question":"1. From the perspective of Modern Monetary Theory (MMT) he is correct, excessive real wages growth can trigger mass unemployment.","ID":"2266","explanation":"","answers":[{"ID":"11321","answer":"False","correct":"0"},{"ID":"11320","answer":"True","correct":"1"}]},{"question":"2. A government desires to reduce the unemployment rate over the next year and gears its macroeconomic policy to maintaining trend real GDP growth, which is 3.5 per cent per annum. If we know that labour productivity is growing at 2 per cent per annum, the labour force is growing at 1.5 per cent per annum, and the average working week is constant in hours, will the government succeed in its aim assuming real GDP is sustained at the trend?","ID":"2267","explanation":"","answers":[{"ID":"11323","answer":"No","correct":"1"},{"ID":"11322","answer":"Yes","correct":"0"}]},{"question":"3. A sovereign national government can run a balanced fiscal position over the economic cycle (peak to peak) as long as it accepts, that after all the spending adjustments are exhausted, that the private domestic balance will only be in surplus if the external balance is in surplus.","ID":"2268","explanation":"","answers":[{"ID":"11325","answer":"False","correct":"0"},{"ID":"11324","answer":"True","correct":"1"}]}]}, {"ID":"619","name":"Quiz 2021 - 4","added_on":"2021-01-21 19:36:35","questions":[{"question":"1. Government spending which is accompanied by a bond sale to the non-government sector adds less to aggregate demand than would be the case if there was no bond sale because some spending capacity in the non-government sector is withdrawn.","ID":"2269","explanation":"","answers":[{"ID":"11333","answer":"False","correct":"1"},{"ID":"11332","answer":"True","correct":"0"}]},{"question":"2. If the external sector is always in surplus, then the government can safely run a surplus and not impede economic growth.","ID":"2270","explanation":"","answers":[{"ID":"11335","answer":"False","correct":"1"},{"ID":"11334","answer":"True","correct":"0"}]},{"question":"3. In a stock-flow consistent macroeconomics, we have to always trace the impact of flows during a period on the relevant stocks at the end of the period. Accordingly, if household consumption expenditure out of disposable income rises by 80 cents in each extra dollar received, then the residual will flow into the stock of saving.n","ID":"2271","explanation":"","answers":[{"ID":"11337","answer":"False","correct":"1"},{"ID":"11336","answer":"True ","correct":"0"}]}]}, {"ID":"620","name":"Quiz 2021 - 5","added_on":"2021-01-27 23:12:31","questions":[{"question":"1. If the annual inflation rate is greater than the growth in money wages, we can conclude that there has been a redistribution of national income towards profits because the real wage has fallen.","ID":"2272","explanation":"","answers":[{"ID":"11345","answer":"False","correct":"1"},{"ID":"11344","answer":"True","correct":"0"}]},{"question":"2. The non-government sector net wealth rises when there are government fiscal deficits, because, under current institutional practices, governments issue bonds to exactly match ($-for-$) their deficits.","ID":"2273","explanation":"","answers":[{"ID":"11347","answer":"False","correct":"1"},{"ID":"11346","answer":"True","correct":"0"}]},{"question":"3. Assume that a national is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would always find:","ID":"2274","explanation":"","answers":[{"ID":"11348","answer":"A public fiscal deficit.","correct":"1"},{"ID":"11349","answer":"A public fiscal surplus.","correct":"0"},{"ID":"11350","answer":"Cannot tell because we don"t know the scale of the private domestic sector saving as a % of GDP.","correct":"0"}]}]}, {"ID":"621","name":"Quiz 2021 - 6","added_on":"2021-02-04 22:16:04","questions":[{"question":"1. For a nation running a current account deficit, national income adjustments will ensure the government fiscal position is in deficit no matter what the government"s intentions are if the private domestic sector is spending less than its income.","ID":"2275","explanation":"","answers":[{"ID":"11360","answer":"False","correct":"0"},{"ID":"11359","answer":"True","correct":"1"}]},{"question":"2. It would be impossible for a government to avoid issuing debt to the non-government sector when running a fiscal deficit while the central bank was targeting a positive short-term policy rate.","ID":"2276","explanation":"","answers":[{"ID":"11358","answer":"False","correct":"1"},{"ID":"11357","answer":"True","correct":"0"}]},{"question":"3. EMU member nations face solvency risk because they do not issue their own currency. This source of risk would not be eliminated if these nations exited the Eurozone and re-established their currency sovereignty - that is, issued their own floating currency.","ID":"2277","explanation":"","answers":[{"ID":"11364","answer":"False","correct":"0"},{"ID":"11363","answer":"True ","correct":"1"}]}]}, {"ID":"622","name":"Quiz 2021 -7","added_on":"2021-02-11 05:02:06","questions":[{"question":"1. National accounting rules dictate that a national government surplus equals a non-government deficit (and vice-versa). If a national government successfully achieves a fiscalsurplus through an austerity program then the private domestic sector must therefore be spending more than it is earning.","ID":"2278","explanation":"","answers":[{"ID":"11372","answer":"False","correct":"1"},{"ID":"11371","answer":"True","correct":"0"}]},{"question":"2. The relentless push by neo-liberals to cut real wages growth has ensured the share of national income going to profits has expanded over the last 30 years in many nations.","ID":"2279","explanation":"","answers":[{"ID":"11374","answer":"False","correct":"1"},{"ID":"11373","answer":"True","correct":"0"}]},{"question":"3. Unemployment can still rise when employment growth keeps pace with labour force growth.","ID":"2280","explanation":"","answers":[{"ID":"11376","answer":"False","correct":"0"},{"ID":"11375","answer":"True","correct":"1"}]}]}, {"ID":"623","name":"Quiz 2021 -8","added_on":"2021-02-18 20:44:22","questions":[{"question":"1. Central banks provide reserves to the commercial banking system usually at some penalty rate. However, this compromises their capacity to target a given monetary policy rate.","ID":"2281","explanation":"","answers":[{"ID":"11394","answer":"False","correct":"0"},{"ID":"11393","answer":"True","correct":"1"}]},{"question":"2. If the real interest rate (difference between nominal interest rate and inflation) is constant, then a currency-issuing government, which matches its net spending $-for-$ with debt issuance, could double its fiscal deficit without pushing up the public debt ratio.","ID":"2282","explanation":"","answers":[{"ID":"11392","answer":"False","correct":"0"},{"ID":"11391","answer":"True","correct":"1"}]},{"question":"3. Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current interest rate target. If on average the government collects an income tax of 20 cents in the dollar, then total tax revenue will rise by 0.20 times $x if government spending increases (once and for all) by $X dollars and private investment and exports remain unchanged.","ID":"2283","explanation":"","answers":[{"ID":"11390","answer":"False","correct":"1"},{"ID":"11389","answer":"True","correct":"0"}]}]}, {"ID":"624","name":"Quiz 2021 - 9","added_on":"2021-02-25 18:29:58","questions":[{"question":"1. When a nation is generating large external surpluses, it can create more space for non-inflationary spending in the future if the government runs fiscal surpluses and accumulates them in a sovereign fund.","ID":"2284","explanation":"","answers":[{"ID":"11402","answer":"False","correct":"1"},{"ID":"11401","answer":"True","correct":"0"}]},{"question":"2. When output gaps are based on the concept of the NAIRU (Non-Accelerating-Inflation-Rate-of-Unemployment), the estimates produced will usually lead one to conclude that a government"s discretionary fiscal position is more expansionary than it actually is. ","ID":"2285","explanation":"","answers":[{"ID":"11404","answer":"False","correct":"0"},{"ID":"11403","answer":"True","correct":"1"}]},{"question":"3. A nation can run a external deficit accompanied by a larger government sector surplus (expressed as a percentage of GDP), while the private domestic sector is spending less than they are earning.","ID":"2286","explanation":"","answers":[{"ID":"11406","answer":"False","correct":"1"},{"ID":"11405","answer":"True","correct":"0"}]}]}, {"ID":"625","name":"Quiz 2021 - 10","added_on":"2021-03-04 06:02:49","questions":[{"question":"1. Assume that the national accounts of a nation is reveal that its external surplus is equivalent to 2 per cent of GDP and the private domestic sector is saving overall 3 per cent of GDP. We would also observe:nnA fiscal deficit equal to 1 per cent of GDP.nA budget surplus equal to 1 per cent of GDP.nA budget deficit equal to 5 per cent of GDP.nA budget surplus equal to 5 per cent of GDP.","ID":"2287","explanation":"","answers":[{"ID":"11413","answer":"A fiscal deficit equal to 1 per cent of GDP.","correct":"1"},{"ID":"11414","answer":"A fiscal surplus equal to 1 per cent of GDP.","correct":"0"},{"ID":"11415","answer":"A fiscal deficit equal to 5 per cent of GDP.","correct":"0"},{"ID":"11416","answer":"A fiscal surplus equal to 5 per cent of GDP.","correct":"0"}]},{"question":"2. When a government"s fiscal deficit rises we can conclude that it is pursuing an expansionary fiscal policy.","ID":"2288","explanation":"","answers":[{"ID":"11422","answer":"False","correct":"1"},{"ID":"11421","answer":"True","correct":"0"}]},{"question":"3. Given a fiat currency issuing nation is not revenue constrained, it is incorrect to say that recipients of income support provided by such a national government are living off the hard work of those who pay income taxes.","ID":"2289","explanation":"","answers":[{"ID":"11420","answer":"False","correct":"1"},{"ID":"11419","answer":"True","correct":"0"}]}]}, {"ID":"626","name":"Quiz 2021 - 11","added_on":"2021-03-11 02:46:03","questions":[{"question":"1. The automatic stabilisers built into national government fiscal frameworks work in a counter-cyclical manner.","ID":"2290","explanation":"","answers":[{"ID":"11430","answer":"False","correct":"0"},{"ID":"11429","answer":"True","correct":"1"}]},{"question":"2. If the nation is running a current account deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit), then the private domestic sector must be spending less than they are earning.","ID":"2291","explanation":"","answers":[{"ID":"11434","answer":"False","correct":"1"},{"ID":"11433","answer":"True","correct":"0"}]},{"question":"3. To ensure that the financial system is stable, the central bank has to allow the money supply to be driven by the monetary base.","ID":"2292","explanation":"","answers":[{"ID":"11432","answer":"False","correct":"1"},{"ID":"11431","answer":"True","correct":"0"}]}]}, {"ID":"627","name":"Quiz 2021 - 12","added_on":"2021-03-20 17:11:33","questions":[{"question":"1. When an economy is running a current account deficit, national income movements will ensure that only one of the two remaining sectors (government and private domestic) end up spending less than they receive, irrespective of the GDP growth rate.","ID":"2293","explanation":"","answers":[{"ID":"11448","answer":"False","correct":"0"},{"ID":"11447","answer":"True","correct":"1"}]},{"question":"2. Unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"2294","explanation":"","answers":[{"ID":"11450","answer":"False","correct":"1"},{"ID":"11449","answer":"True","correct":"0"}]},{"question":"3. Over the last two decades, there have been major redistributions of national income towards profits in many nations. This has occurred because of the suppression of real wages growth.","ID":"2295","explanation":"","answers":[{"ID":"11452","answer":"False","correct":"1"},{"ID":"11451","answer":"True","correct":"0"}]}]}, {"ID":"628","name":"Quiz 2021 - 13","added_on":"2021-03-25 20:36:52","questions":[{"question":"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:","ID":"2296","explanation":"","answers":[{"ID":"11459","answer":"National income rises and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"11460","answer":"National income remains unchanged and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"11461","answer":"National income falls and the private domestic surplus moves from 4 per cent of GDP to 6 per cent of GDP.","correct":"0"},{"ID":"11462","answer":"National income rises and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"1"},{"ID":"11463","answer":"National income remains unchanged and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"},{"ID":"11464","answer":"National income falls and the private domestic surplus moves from 0 per cent of GDP to 2 per cent of GDP.","correct":"0"}]},{"question":"2. A rising fiscal deficit indicates that discretionary fiscal policy is expansionary.","ID":"2297","explanation":"","answers":[{"ID":"11466","answer":"False","correct":"1"},{"ID":"11465","answer":"True","correct":"0"}]},{"question":"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. ","ID":"2298","explanation":"","answers":[{"ID":"11468","answer":"False","correct":"1"},{"ID":"11467","answer":"True","correct":"0"}]}]}, {"ID":"629","name":"Quiz 2021 - 14","added_on":"2021-04-01 03:10:05","questions":[{"question":"1. Which of the following would add to GDP in any on period?n
n
    n
  1. (a) The purchase of some strawberries from the supermarket.
    2. n
  2. (b) The payment by the national government for public servants in the tax department.
    3. n
  3. (c) The payment by the national government to an aged pension recipient.
    4. n
  4. (d) The purchase of a old model car from a car dealer.
    5. n
  5. (e) The purchase of some house paint by an owner occupier as part of a refurbishment project.
    6. n
  6. (f) The purchase of some house paint by a professional painting tradesperson as part of a refurbishment project.
    7. n
  7. (g) The sale of some military equipment to another country.n
  8. (h) The purchase of some shares in an airline company.
    9. n
","ID":"2299","explanation":"","answers":[{"ID":"11517","answer":"a, b, e, g","correct":"1"},{"ID":"11516","answer":"a, b, c, e, g","correct":"0"},{"ID":"11515","answer":"a, b, c, f, g","correct":"0"},{"ID":"11514","answer":"a, b, c, d","correct":"0"}]},{"question":"2. Suppose an economy produces two products: Product A and Product B. This is the data for two years. By how much has the economy grown between Year 1 and Year 2?nn
n
nnnnnnnnnnnnnnnnnnnnnnnnnnn
ProductYear 1 Price Per Unit ($)Year 1 Output (units)Year 2 Price Per Unit ($)Year 2 Output (units)
Product A1.00202.5010
Product B2.00153.0025
","ID":"2300","explanation":"","answers":[{"ID":"11527","answer":"Cannot tell from the information given.","correct":"0"},{"ID":"11526","answer":"100 per cent","correct":"0"},{"ID":"11525","answer":"20 per cent","correct":"1"},{"ID":"11524","answer":"15 per cent","correct":"0"},{"ID":"11523","answer":"5 per cent","correct":"0"}]},{"question":"3. If the output an economy can achieve when all resources are productively employed is $120 billion and in the current year actual real GDP is on $114 billion, the output gap would be:","ID":"2301","explanation":"","answers":[{"ID":"11488","answer":"2 per cent","correct":"0"},{"ID":"11489","answer":"4 per cent","correct":"0"},{"ID":"11490","answer":"5 per cent","correct":"1"},{"ID":"11491","answer":"6 per cent","correct":"0"}]},{"question":"4. The reason that economy-wide wage cuts will not reduce unemployment relates to the observation that:","ID":"2302","explanation":"","answers":[{"ID":"11492","answer":"Wages are both an income to workers and a cost to firms.","correct":"1"},{"ID":"11493","answer":"Workers will go on strike if their wages are cut.","correct":"0"},{"ID":"11494","answer":"Cutting wages will reduce import expenditure.","correct":"0"},{"ID":"11495","answer":"Firms know that if they cut wages, they will damage their reputation.","correct":"0"}]},{"question":"5. Which nations will be considered to have the highest GDP over the year?n
n
n
    n
  1. (a) A military-inclined nation that produces $130 billion worth of new tanks and jet fighters in addition to $100 billion worth of all other final goods and services.
    2. n
  2. (b) A nation that produces no military equipment, but instead, creates a new renewable industry that produces $200 billion worth of new solar panels, pays $20 billion out to old aged pensioners, and produces and additional $30 billion worth of all other final goods and services.
    3. n
  3. (c) A social democratic nation that produces $10 billion worth of new military equipment, builds $50 billion worth of new schools and universities, and produces an addition $170 billion worth of all other final goods and services.
    4. n
  4. (d) A nation where the government spends $40 billion in environmental restoration projects, businesses purchase new machinery and equipment worth $30 billion, export sales to the rest of the world equal $60 billion and consumers purchase $100 billion worth of final goods and services.
    5. n
","ID":"2303","explanation":"","answers":[{"ID":"11532","answer":"They all have the same level of production","correct":"1"},{"ID":"11531","answer":"d","correct":"0"},{"ID":"11530","answer":"c","correct":"0"},{"ID":"11529","answer":"b","correct":"0"},{"ID":"11528","answer":"a","correct":"0"}]}]}, {"ID":"630","name":"Quiz 2021 - 15","added_on":"2021-04-05 22:39:32","questions":[{"question":"1. The reason that MMT economists favour flexible exchange rates over the Bretton Woods system of fixed exchange rates is because:","ID":"2304","explanation":"","answers":[{"ID":"11533","answer":"(a) Fiscal and monetary policy tools can target domestic policy outcomes and not be compromised by having to defend a particular exchange rate as was the case under Bretton Woods system.","correct":"1"},{"ID":"11534","answer":"(b) Taxes are not required to fund government spending.","correct":"0"},{"ID":"11535","answer":"(c) Government debt is able to be paid back more easily.","correct":"0"},{"ID":"11536","answer":"(d) Currency speculation is reduced.","correct":"0"}]},{"question":"2. The lesson that the Pompeii story taught us was that:","ID":"2305","explanation":"","answers":[{"ID":"11537","answer":"(a) The old coins used in Pompeii were able to buy goods and services.","correct":"0"},{"ID":"11538","answer":"(b) The government had to spend first before it could collect taxes.","correct":"1"},{"ID":"11539","answer":"(c) The once thriving city was destroyed by a volcanic eruption.","correct":"0"},{"ID":"11540","answer":"(d) Some people worked in the non-government sector.","correct":"0"}]},{"question":"3. If the expenditure multiplier is estimated to be 1.5, then if the government expands its spending by $100 billion, we expect GDP to rise by","ID":"2306","explanation":"","answers":[{"ID":"11541","answer":"(a) $1500 billion.","correct":"0"},{"ID":"11542","answer":"(b) $1.5 billion.","correct":"0"},{"ID":"11543","answer":"(c) $150 billion.","correct":"1"},{"ID":"11544","answer":"(d) $100 billion less 1.5 times $100 billion.","correct":"0"}]},{"question":"4. The expenditure multiplier will be largest in which case:","ID":"2307","explanation":"","answers":[{"ID":"11545","answer":"(a) Households consume 70 cents of every extra dollar in disposable income received.","correct":"0"},{"ID":"11546","answer":"(b) Households consume 80 cents of every extra dollar in disposable income received.","correct":"0"},{"ID":"11547","answer":"(c) Households save 20 cents of every extra dollar in disposable income received.","correct":"0"},{"ID":"11548","answer":"(d) Households save 10 cents of every extra dollar in disposable income received.","correct":"1"}]},{"question":"5. If you observed the following conditions, which would be consistent with a stable GDP level?","ID":"2308","explanation":"","answers":[{"ID":"11549","answer":"(a) The government deficit is $10 (spending greater than tax revenue), household saving is $20, Import expenditure is $20, total investment expenditure is $20 and export sales equal $10. The unemployment rate is 10 per cent.","correct":"1"},{"ID":"11550","answer":"(b) The government deficit is $15 (spending greater than tax revenue), household saving is $20, Import expenditure is $20, total investment expenditure is $15 and export sales equal $15. The unemployment rate is 5 per cent.","correct":"0"},{"ID":"11551","answer":"(c) The government deficit is $10 (spending greater than tax revenue), household saving is $15, Import expenditure is $20, total investment expenditure is $10 and export sales equal $10. The unemployment rate is 12 per cent.","correct":"0"},{"ID":"11552","answer":"(d) The government deficit is $10 (spending greater than tax revenue), household saving is $20, Import expenditure is $20, total investment expenditure is $20 and export sales equal $15. The unemployment rate is 10 per cent.","correct":"0"}]}]}, {"ID":"631","name":"Quiz 2021 - 16","added_on":"2021-04-14 21:25:16","questions":[{"question":"1. Which of these situations represents an inflationary episode in the macroeconomic sense?nn
    n
  1. (a) On July 1, 2000, the Australian government introduced a Goods and Services Tax of 10 per cent on most goods and services (with some exemptions). In the September-quarter 2000, the Consumer Price Index rose by 6.1 per cent.
    2. n
  2. (b) The press reported that Australias property prices rose at their fastest rate since 2003 in February 2021.
    3. n
  3. (c) The Consumer Price Index rose by 9 per cent in month one, six per cent in month two and 3 per cent in month three.
    4. n
  4. (d) The Consumer Price Index rose by 3 per cent in month one, 6 per cent in month two and 9 per cent in month three.
    5. n
","ID":"2309","explanation":"","answers":[{"ID":"11553","answer":"(a)","correct":"0"},{"ID":"11554","answer":"(b)","correct":"0"},{"ID":"11555","answer":"(c)","correct":"0"},{"ID":"11556","answer":"(d)","correct":"0"},{"ID":"11557","answer":"(a) and (b)","correct":"0"},{"ID":"11558","answer":"(b) and (c)","correct":"0"},{"ID":"11559","answer":"(c) and (d)","correct":"1"}]},{"question":"2. In 2008, the consumer price level in Zimbabwe rose by 157 per cent. Between 1998 and 2008, real GDP fell by 50.7 per cent. The hyperinflation arose mainly because:","ID":"2310","explanation":"","answers":[{"ID":"11560","answer":"(a) The Zimbabwean government was spending too much.","correct":"0"},{"ID":"11561","answer":"(b) The Reserve Bank of Zimbabwe was issuing too much money.","correct":"0"},{"ID":"11562","answer":"(c) Private banks were issuing too much credit.","correct":"0"},{"ID":"11563","answer":"(d) The supply side of the economy contracted so much that previously normal (non-inflationary) levels of spending growth were now vastly excessive","correct":"1"}]},{"question":"3. An employment buffer stock scheme involves the government offering an infinite demand for labour. This means that:","ID":"2311","explanation":"","answers":[{"ID":"11564","answer":"(a) the supply of labour is fixed.","correct":"0"},{"ID":"11565","answer":"(b) the scheme will expand and contract on demand from workers for jobs.","correct":"1"},{"ID":"11566","answer":"(c) the government allocates a fixed amount of currency to run the program.","correct":"0"},{"ID":"11567","answer":"(d) unproductive jobs can be created at will.","correct":"0"}]},{"question":"4. A major criticism of mainstream economists of the use of fiscal deficits is that they crowd out productive private spending. That criticism errs because:","ID":"2312","explanation":"","answers":[{"ID":"11579","answer":"(d) Interest rates are now at very low levels.","correct":"0"},{"ID":"11577","answer":"(b) Banks create deposits when they make loans to credit-worthy customers.","correct":"1"},{"ID":"11578","answer":"(c) The central bank is part of government.","correct":"0"},{"ID":"11576","answer":"(a) A currency-issuing government can buy whatever is for sale in its own currency.","correct":"0"}]},{"question":"5. Commercial banks are required to hold reserve accounts with the central bank for which reason:","ID":"2313","explanation":"","answers":[{"ID":"11572","answer":"(a) To protect their shareholders from losses.","correct":"0"},{"ID":"11573","answer":"(b) To ensure their depositors can earn interest.","correct":"0"},{"ID":"11574","answer":"(c) To ensure that all daily transactions in the economy that involve claims between banks can be resolved without any cheques bouncing.","correct":"1"},{"ID":"11575","answer":"(d) To make it easier for government to know what is going on in financial markets.","correct":"0"}]}]}, {"ID":"632","name":"Quiz 2021 - 17","added_on":"2021-04-21 23:45:12","questions":[{"question":"1. The MMT classification of exports as a cost means:","ID":"2314","explanation":"","answers":[{"ID":"11580","answer":"(a) Currency-issuing governments are not financially constrained.","correct":"0"},{"ID":"11581","answer":"(b) Foreign spending into the local economy can be inflationary.","correct":"0"},{"ID":"11582","answer":"(c) The resources that are embodied in exports are lost to the nation and are, instead, used by foreigners to enhance their material prosperity.","correct":"1"},{"ID":"11583","answer":"(d) Government debt interest payments have to be serviced.","correct":"0"}]},{"question":"2. A rising child dependency ratio:","ID":"2315","explanation":"","answers":[{"ID":"11584","answer":"(a) Will ultimately lead to a falling standard dependency ratio once birth rates decline.","correct":"1"},{"ID":"11585","answer":"(b) Means that people of retirement age are increasing at a faster rate than children.","correct":"0"},{"ID":"11586","answer":"(c) Means that child care centres are becoming more dependent on government support.","correct":"0"},{"ID":"11587","answer":"(d) Means the aged dependency ratio is falling.","correct":"0"}]},{"question":"3. When a nations exchange rate depreciates:","ID":"2316","explanation":"","answers":[{"ID":"11588","answer":"(a) The nations inflation rate accelerates.","correct":"0"},{"ID":"11589","answer":"(b) Imported motor vehicles become cheaper for residents to buy.","correct":"0"},{"ID":"11590","answer":"(c) Foreigners stop coming to the nation for holidays.","correct":"0"},{"ID":"11591","answer":"(d) Imported goods become more expensive in the local currency.","correct":"1"}]},{"question":"4. When a nations exchange rate appreciates, the debt servicing payments for debt denominated in a foreign currency:","ID":"2317","explanation":"","answers":[{"ID":"11592","answer":"(a) Fall in local currency terms.","correct":"1"},{"ID":"11593","answer":"(b) Rise in local currency terms.","correct":"0"},{"ID":"11594","answer":"(c) Are unchanged in local currency terms because the payments are fixed by contract.","correct":"0"},{"ID":"11595","answer":"(d) Rise because foreign governments require higher payments.","correct":"0"}]},{"question":"5. A nation will become more competitive in international trade if:n
    n
  1. (a) Its nominal exchange rate is unchanged, but its inflation rate falls relative to other nations.
    2. n
  2. (b) Its nominal exchange rate is unchanged, but its inflation rate rises relative to other nations.
    3. n
  3. (c) Its nominal exchange rate appreciates, but its inflation rate is unchanged relative to other nations.
    4. n
  4. (d) Its nominal exchange rate depreciates, but its inflation rate is unchanged relative to other nations.
    5. n
","ID":"2318","explanation":"","answers":[{"ID":"11596","answer":"(a)","correct":"0"},{"ID":"11597","answer":"(b)","correct":"0"},{"ID":"11598","answer":"(c)","correct":"0"},{"ID":"11599","answer":"(d)","correct":"0"},{"ID":"11600","answer":"(a) and (b)","correct":"0"},{"ID":"11601","answer":"(b) and (c)","correct":"0"},{"ID":"11602","answer":"(a) and (c)","correct":"0"},{"ID":"11603","answer":"(a) and (d)","correct":"1"}]}]}, {"ID":"633","name":"Quiz 2021 - 18","added_on":"2021-04-29 02:44:57","questions":[{"question":"1. When there is an external deficit, the private sector can reduce its overall indebtedness as long as the government supports saving by running a deficit.","ID":"2319","explanation":"","answers":[{"ID":"11611","answer":"False","correct":"1"},{"ID":"11610","answer":"True","correct":"0"}]},{"question":"2. When a sovereign government issues debt it has no impact on the overall holdings of assets held by the non-government sector.","ID":"2320","explanation":"","answers":[{"ID":"11613","answer":"False","correct":"0"},{"ID":"11612","answer":"True","correct":"1"}]},{"question":"3. When 10-year government bond yields rise you now that bond markets are demanding increased risk coverage for these assets.","ID":"2321","explanation":"","answers":[{"ID":"11615","answer":"False","correct":"1"},{"ID":"11614","answer":"True","correct":"0"}]}]}, {"ID":"634","name":"Quiz 2021 - 19","added_on":"2021-05-06 02:05:37","questions":[{"question":"1. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would find","ID":"2322","explanation":"","answers":[{"ID":"11626","answer":"A fiscal deficit","correct":"1"},{"ID":"11627","answer":"A fiscal surplus","correct":"0"},{"ID":"11628","answer":"Cannot determine because we would need to know the scale of the private domestic sector saving as a % of GDP","correct":"0"}]},{"question":"2. Government bonds constitute non-government financial wealth. Accordingly, non-government net worth immediately rises if the government issues new bonds to match its deficit spending.","ID":"2323","explanation":"","answers":[{"ID":"11623","answer":"False","correct":"1"},{"ID":"11622","answer":"True","correct":"0"}]},{"question":"3. A government wanting to achieve full employment after a deep recession will succeed if it uses discretionary fiscal policy to ensure real GDP growth gets back on trend.","ID":"2324","explanation":"","answers":[{"ID":"11632","answer":"False","correct":"1"},{"ID":"11631","answer":"True","correct":"0"}]}]}, {"ID":"635","name":"Quiz 2021 - 20","added_on":"2021-05-13 06:28:20","questions":[{"question":"1. A sovereign national government can run a balanced fiscal position over the economic cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will only be in surplus if the external balance is in surplus when averaged out over the same cycle.","ID":"2325","explanation":"","answers":[{"ID":"11640","answer":"False","correct":"0"},{"ID":"11639","answer":"True","correct":"1"}]},{"question":"2. An understanding of Modern Monetary Theory (MMT) allows us to understand that mass unemployment can arise if the growth in real wages are excessive.","ID":"2326","explanation":"","answers":[{"ID":"11642","answer":"False","correct":"0"},{"ID":"11641","answer":"True","correct":"1"}]},{"question":"3. Only one of the following statements is definitely true when you observe rising government bond yields for new issues:n","ID":"2327","explanation":"","answers":[{"ID":"11645","answer":"Government spending is becoming more expensive.","correct":"0"},{"ID":"11646","answer":"Bond prices are falling in response to falling demand.","correct":"1"},{"ID":"11647","answer":"Government spending is increasing the cost of borrowing for private investors.","correct":"0"}]}]}, {"ID":"636","name":"Quiz 2021 - 21","added_on":"2021-05-20 23:30:33","questions":[{"question":"1. Assume inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting. It is then true that if government spending increases by $X dollars and private investment and exports are unchanged then nominal income will continue growing until the sum of taxation revenue, import spending and household saving rises by $X dollars.","ID":"2328","explanation":"","answers":[{"ID":"11655","answer":"False","correct":"0"},{"ID":"11654","answer":"True","correct":"1"},{"ID":"11656","answer":"Maybe","correct":"0"}]},{"question":"2. The crucial difference between a monetary system based on the gold standard world and a fiat currency monetary is:","ID":"2329","explanation":"","answers":[{"ID":"11657","answer":"that under the former system, excessive national government spending led to inflation.n","correct":"0"},{"ID":"11658","answer":"that under the former system, the national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"11659","answer":"that under the former system, the national government could not use net spending to achieve full employment.","correct":"0"}]},{"question":"3. When the national government"s fiscal balance moves into deficit:","ID":"2330","explanation":"","answers":[{"ID":"11660","answer":"it is a sign that the government is trying to stimulate the economy.","correct":"0"},{"ID":"11661","answer":"it is a sign that the government is worried that unemployment is rising","correct":"0"},{"ID":"11662","answer":"you cannot conclude anything about the government"s policy intentions.","correct":"1"}]}]}, {"ID":"637","name":"Quiz 2021 - 22","added_on":"2021-05-27 07:45:41","questions":[{"question":"1. Mainstream economists use the notion of "crowding out" to argue that public spending squeezes out private spending and results in a less efficient allocation of resources overall. Modern Monetary Theory (MMT) denies that crowding out can occur.","ID":"2331","explanation":"","answers":[{"ID":"11663","answer":"True","correct":"0"},{"ID":"11664","answer":"False","correct":"1"}]},{"question":"2. A rising government deficit will always allow the private domestic sector to increase its overall saving in nominal terms.","ID":"2332","explanation":"","answers":[{"ID":"11673","answer":"False","correct":"1"},{"ID":"11672","answer":"True","correct":"0"}]},{"question":"3. Assume the government increases spending by $100 billion in the each of the next three years from now. Economists estimate the spending multiplier to be 1.5 and the impact is immediate and exhausted in each year. They also estimate the tax multiplier (which captures the impact of rising tax rates on GDP) to be equal to 1 and the current average tax rate is equal to 30 per cent. What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"2333","explanation":"","answers":[{"ID":"11668","answer":"$135 billion","correct":"0"},{"ID":"11669","answer":"$150 billion","correct":"0"},{"ID":"11670","answer":"$315 billion","correct":"0"},{"ID":"11671","answer":"$450 billion","correct":"1"}]}]}, {"ID":"638","name":"Quiz 2021 - 23","added_on":"2021-06-03 06:06:23","questions":[{"question":"1. Central bankers are talking about retaining quantitative easing to ease the aggregate demand losses associated with the implementation of withdrawal of fiscal stimulus programs. If calibrated correctly, QE can replace the net financial assets destroyed by the withdrawal of the fiscal injection.","ID":"2334","explanation":"","answers":[{"ID":"11681","answer":"False","correct":"1"},{"ID":"11680","answer":"True","correct":"0"}]},{"question":"2. If the growth in wages (the money you get paid) keeps pace with inflation which is accelerating at the same rate as labour productivity is growing, then the profit share in GDP remains constant.","ID":"2335","explanation":"","answers":[{"ID":"11687","answer":"False","correct":"0"},{"ID":"11686","answer":"True","correct":"1"}]},{"question":"3. The government is attempting to stimulate the economy via an expansion in the fiscal deficit. The private market orientated advisors tell them to cut taxes and \\\"privatise\\\" the expansion whereas the more civic-minded advisors argue that there is a need for improved public infrastructure which requires increases in government spending. So imagine that the government is choosing between a tax cut that will reduce tax revenue at the current level of national income by $x and a spending increase of $x. Which policy option will have the greater initial impact on aggregate demand?","ID":"2336","explanation":"","answers":[{"ID":"11682","answer":"Tax cut","correct":"0"},{"ID":"11683","answer":"Spending increase","correct":"1"},{"ID":"11684","answer":"Both will be equivalent","correct":"0"},{"ID":"11685","answer":"There is not enough information to answer this question","correct":"0"}]}]}, {"ID":"639","name":"Quiz 2021 - 24","added_on":"2021-06-10 03:45:07","questions":[{"question":"1. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.","ID":"2337","explanation":"","answers":[{"ID":"11699","answer":"False","correct":"0"},{"ID":"11698","answer":"True","correct":"1"}]},{"question":"2. For a nation running an external deficit, income adjustments will ensure that the government fiscal balance is in deficit if the domestic private sector is save overall as a percentage of GDP.","ID":"2338","explanation":"","answers":[{"ID":"11697","answer":"False","correct":"0"},{"ID":"11696","answer":"True","correct":"1"}]},{"question":"3. Higher levels of taxation permit the government to spend more.","ID":"2339","explanation":"","answers":[{"ID":"11695","answer":"False","correct":"0"},{"ID":"11694","answer":"True","correct":"1"}]}]}, {"ID":"640","name":"Quiz 2021 - 25","added_on":"2021-06-17 06:58:59","questions":[{"question":"1. Government spending which is accompanied by a bond sale to the non-government sector adds less to aggregate demand than would be the case if there was no bond sale.","ID":"2340","explanation":"","answers":[{"ID":"11707","answer":"False","correct":"1"},{"ID":"11706","answer":"True","correct":"0"}]},{"question":"2. If the external balance is always in surplus, then the government can safely run a fiscal surplus and not impede economic growth.","ID":"2341","explanation":"","answers":[{"ID":"11709","answer":"False","correct":"1"},{"ID":"11708","answer":"True","correct":"0"}]},{"question":"3. In a stock-flow consistent macroeconomics, we have to always trace the impact of flows during a period on the relevant stocks at the end of the period. Accordingly, government and private investment spending are two examples of flows that adds to the stock of aggregate spending which in turn impacts on GDP.","ID":"2342","explanation":"","answers":[{"ID":"11711","answer":"False","correct":"1"},{"ID":"11710","answer":"True","correct":"0"}]}]}, {"ID":"641","name":"Quiz 2021 - 26","added_on":"2021-06-24 06:30:13","questions":[{"question":"1. The debate about creating a European-wide bond has been motivated by the desire to prevent sovereign defaults among member countries who are having trouble covering their net spending positions with market-sourced finance. The solvency risk is however sourced in the restrictions imposed on deficit and debt ratios by the Stability and Growth Pact which member states voluntarily agreed to.","ID":"2343","explanation":"","answers":[{"ID":"11724","answer":"False","correct":"1"},{"ID":"11723","answer":"True","correct":"0"}]},{"question":"2. If the monthly Labour Force data shows that employment grew by 400 in net terms over the last month, unemployment rose by 10,700, and the participation rate fell by 0.1 points then we can conclude that:","ID":"2344","explanation":"","answers":[{"ID":"11727","answer":"The labour force grew faster than employment but you cannot tell what happened to the working age population from the information provided.","correct":"0"},{"ID":"11725","answer":"The labour force grew faster than employment but not as fast the working age population.","correct":"1"},{"ID":"11726","answer":"The working age population grew faster than employment and offset the decline in the labour force arising from the drop in the participation rate.","correct":"0"}]},{"question":"3. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"2345","explanation":"","answers":[{"ID":"11719","answer":"False","correct":"1"},{"ID":"11718","answer":"True","correct":"0"}]}]}, {"ID":"642","name":"Quiz 2021 - 27","added_on":"2021-07-01 04:08:15","questions":[{"question":"1. If the external sector overall is in deficit, it is still possible for the private domestic sector and government sector to run surpluses and each pay down its debt as long as GDP growth is fast enough (the technical condition is that the rate of GDP growth has to be faster than the real interest rate).","ID":"2346","explanation":"","answers":[{"ID":"11737","answer":"False","correct":"1"},{"ID":"11736","answer":"True","correct":"0"}]},{"question":"2. Federal government debt (where there is currency sovereignty) is not really a liability because the government can just roll it over continuously and thus they never have to pay it back. This is different to a household, which not only has to service its debt but also has to repay them at the due date.","ID":"2347","explanation":"","answers":[{"ID":"11735","answer":"False","correct":"1"},{"ID":"11734","answer":"True","correct":"0"}]},{"question":"3. Even though the money multiplier found in macroeconomics textbooks is a flawed description of the way the monetary system operates, having some positive minimum reserve requirements does constrain credit creation activities of the private banks more than if you have no requirements other than the rule that balances have to be non-zero.","ID":"2348","explanation":"","answers":[{"ID":"11739","answer":"False","correct":"1"},{"ID":"11738","answer":"True ","correct":"0"}]}]}, {"ID":"643","name":"Quiz 2021 - 28","added_on":"2021-07-07 20:22:51","questions":[{"question":"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:","ID":"2349","explanation":"","answers":[{"ID":"11753","answer":"Surplus of 1 per cent of GDP","correct":"0"},{"ID":"11752","answer":"Deficit of 1 per cent of GDP","correct":"1"}]},{"question":"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.","ID":"2350","explanation":"","answers":[{"ID":"11755","answer":"False","correct":"0"},{"ID":"11754","answer":"True","correct":"1"}]},{"question":"3. During a recession, the government can always restore full employment if it uses expansionary fiscal policy to restore trend real GDP growth.","ID":"2351","explanation":"","answers":[{"ID":"11751","answer":"False","correct":"1"},{"ID":"11750","answer":"True ","correct":"0"}]}]}, {"ID":"644","name":"Quiz 2021 - 29","added_on":"2021-07-15 05:01:03","questions":[{"question":"1. Over the last several decades, governments have introduced punitive measures against the unemployed and exploited the popular view, that the unemployed on income support benefits live off the hard work of those who pay taxes. The popular view has validity.","ID":"2352","explanation":"","answers":[{"ID":"11763","answer":"False","correct":"0"},{"ID":"11762","answer":"True","correct":"1"}]},{"question":"2. Inflation fears are being hawked at the present by the financial media. But a potential problem with running continuous fiscal deficits is that the spending builds up over time which adds to inflationary pressures.","ID":"2353","explanation":"","answers":[{"ID":"11765","answer":"False","correct":"1"},{"ID":"11764","answer":"True","correct":"0"}]},{"question":"3. If private domestic investment is less than private domestic saving, and, the external sector is draining aggregate demand, then the government fiscal balance has to be in deficit no matter what level of GDP is produced.","ID":"2354","explanation":"","answers":[{"ID":"11767","answer":"False","correct":"0"},{"ID":"11766","answer":"True","correct":"1"}]}]}, {"ID":"645","name":"Quiz 2021 - 30","added_on":"2021-07-21 19:22:55","questions":[{"question":"1. If the external sector is in deficit overall and GDP growth rate is faster than the real interest rate, then:","ID":"2355","explanation":"","answers":[{"ID":"11776","answer":"Both the private domestic sector and the government sector overall can pay down their respective debt liabilities.","correct":"0"},{"ID":"11777","answer":"Either the private domestic sector or the government sector overall can pay down their debt liabilities.","correct":"1"},{"ID":"11778","answer":"Neither the private domestic sector or the government sector overall can pay down their debt liabilities.","correct":"0"}]},{"question":"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.","ID":"2356","explanation":"","answers":[{"ID":"11775","answer":"False","correct":"1"},{"ID":"11774","answer":"True","correct":"0"}]},{"question":"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.","ID":"2357","explanation":"","answers":[{"ID":"11782","answer":"False","correct":"1"},{"ID":"11781","answer":"True","correct":"0"}]}]}, {"ID":"646","name":"Quiz 2021 - 31","added_on":"2021-07-29 07:11:46","questions":[{"question":"1. Larger fiscal deficits as a percentage of GDP mean that there are less real resources available for other productive uses.","ID":"2358","explanation":"","answers":[{"ID":"11796","answer":"False","correct":"0"},{"ID":"11795","answer":"True","correct":"1"}]},{"question":"2. For a nation running an external deficit, income adjustments will ensure government will record a deficit if the domestic private sector seeks to increase its saving overall as a percentage of GDP.","ID":"2359","explanation":"","answers":[{"ID":"11798","answer":"False","correct":"0"},{"ID":"11797","answer":"True","correct":"1"}]},{"question":"3. The payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend increase the overall level of reserves held by the latter (ignore any reserve requirements).","ID":"2360","explanation":"","answers":[{"ID":"11800","answer":"False","correct":"0"},{"ID":"11799","answer":"True","correct":"1"}]}]}, {"ID":"647","name":"Quiz 2021 - 32","added_on":"2021-08-05 21:05:52","questions":[{"question":"1. When economic growth resumes, the automatic stabilisers work to reduce government spending and increase taxes, which ensures that the government fiscal balance returns to its appropriate level. ","ID":"2361","explanation":"","answers":[{"ID":"11808","answer":"False","correct":"1"},{"ID":"11807","answer":"True","correct":"0"}]},{"question":"2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"2362","explanation":"","answers":[{"ID":"11818","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"},{"ID":"11817","answer":"A nation can run a external deficit accompanied by a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"11816","answer":"A nation can run a external deficit accompanied by a government sector surplus of equal size, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"11815","answer":"A nation can run a external deficit accompanied by a government sector surplus of equal size, while the private domestic sector is spending less than they are earning.n","correct":"0"}]},{"question":"3. Broad money is a multiple of the monetary base which is what the money multiplier concept explains.","ID":"2363","explanation":"","answers":[{"ID":"11814","answer":"False","correct":"1"},{"ID":"11813","answer":"True","correct":"0"}]}]}, {"ID":"648","name":"Quiz 2021 - 33","added_on":"2021-08-12 22:20:10","questions":[{"question":"1. Over the last several decades, central banks and treasuries have used the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) to define full employment and calibrate their estimates of the state of the economic cycle. Accordingly, these estimates will typically be:n","ID":"2364","explanation":"","answers":[{"ID":"11819","answer":"biased downwards indicating they think the economy is further away from full employment than it actually is.","correct":"0"},{"ID":"11820","answer":"biased upwards indicating they think that the economy is closer to full employment than it actually is.","correct":"1"},{"ID":"11821","answer":"difficult to assess because their forecasts are subject to forecasting inaccuracy.n","correct":"0"}]},{"question":"2. When a sovereign government issues debt it logically:","ID":"2365","explanation":"","answers":[{"ID":"11830","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"},{"ID":"11829","answer":"has no impact on the overall holdings of assets held by the non-government sector $-for-$.","correct":"1"},{"ID":"11828","answer":"increases the assets that are held by the non-government sector $-for-$.","correct":"0"}]},{"question":"3. Only one of the following statements can be true when you observe rising government bond yields for new issues:","ID":"2366","explanation":"","answers":[{"ID":"11833","answer":"Government spending is increasing the cost of borrowing for private investors.","correct":"0"},{"ID":"11832","answer":"Bond prices are falling in response to demand.","correct":"1"},{"ID":"11831","answer":"Government spending is becoming more expensive.","correct":"0"}]}]}, {"ID":"649","name":"Quiz 2021 - 34","added_on":"2021-08-19 07:07:03","questions":[{"question":"1. A fiscal deficit equivalent to 3 per cent of GDP tells us that the government is adopting a less expansionary policy than if the fiscal deficit outcome was equivalent to 5 per cent of GDP.","ID":"2367","explanation":"","answers":[{"ID":"11849","answer":"False","correct":"1"},{"ID":"11848","answer":"True","correct":"0"}]},{"question":"2. When the government borrows from the non-government sector to match an increase in net public spending, the initial increase in aggregate demand is less than would be the case if there was no bond sale.","ID":"2368","explanation":"","answers":[{"ID":"11847","answer":"False","correct":"1"},{"ID":"11846","answer":"True","correct":"0"}]},{"question":"3. Consider the following table which describes four different economies in terms of the behavioural parameters relating to the leakages to aggregate demand.nnAssume that in all four economies, there is idle capacity, the central bank holds all interest rates constant, inflation is constant and there is no changes in international competitiveness.nn
n\\\"\\\"n
nnWhich economy would deliver the largest national income bonus for a given discretionary expansion in government spending.","ID":"2369","explanation":"","answers":[{"ID":"11853","answer":"Economy D","correct":"0"},{"ID":"11852","answer":"Economy C","correct":"0"},{"ID":"11851","answer":"Economy B","correct":"0"},{"ID":"11850","answer":"Economy A","correct":"1"}]}]}, {"ID":"650","name":"Quiz 2021 - 35","added_on":"2021-08-26 22:13:19","questions":[{"question":"1. In a fiat monetary system (for example, US or Australia) with an on-going external deficit, if you desire the domestic private sector to reduce its overall debt levels without employment losses, then you have to support the national government increasing the fiscal deficit beyond the size of the external deficit in line with the private de-leveraging process.","ID":"2370","explanation":"","answers":[{"ID":"11867","answer":"False","correct":"0"},{"ID":"11866","answer":"True","correct":"1"}]},{"question":"2. The only time that a fiscal surplus represents increased national savings is when the government creates a sovereign fund. ","ID":"2371","explanation":"","answers":[{"ID":"11863","answer":"False","correct":"1"},{"ID":"11862","answer":"True","correct":"0"}]},{"question":"3. The massive build-up of Chinese holdings of US government debt allowed US citizens to enjoy a higher material standard of living overall at the expense of the residents of China.","ID":"2372","explanation":"","answers":[{"ID":"11865","answer":"False","correct":"0"},{"ID":"11864","answer":"True","correct":"1"}]}]}, {"ID":"651","name":"Quiz 2021 - 36","added_on":"2021-09-02 21:06:57","questions":[{"question":"1. MMT recognises that increasing the amount of money in the economy will reduce its value.","ID":"2373","explanation":"","answers":[{"ID":"11881","answer":"False","correct":"0"},{"ID":"11880","answer":"True","correct":"0"},{"ID":"11882","answer":"Maybe","correct":"1"}]},{"question":"2. If national government public works expenditure funds the construction of a new road but then digs it up and rebuilds, the expenditure in the rebuild would not count towards national income.","ID":"2374","explanation":"","answers":[{"ID":"11884","answer":"False","correct":"1"},{"ID":"11883","answer":"True","correct":"0"}]},{"question":"3. The marginal propensity to consume (MPC) is the extra consumption that is induced for every extra dollar of national income. The marginal propensity to import (MPM) is similarly the extra spending on imports that is induced for every extra dollar of national income. If the MPC and MPM both rise by 0.1 then the impact on aggregate demand for every new dollar of national income generated will be neutral.","ID":"2375","explanation":"","answers":[{"ID":"11886","answer":"False","correct":"1"},{"ID":"11885","answer":"True","correct":"0"}]}]}, {"ID":"652","name":"Quiz 2021 - 37","added_on":"2021-09-10 01:41:54","questions":[{"question":"1. If we assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting then if government spending increases by $X dollars and private investment and exports are unchanged, the sum of changes to taxation revenue, import spending and household saving will be greater than $X dollars because of the expenditure multiplier.","ID":"2376","explanation":"","answers":[{"ID":"11887","answer":"True","correct":"0"},{"ID":"11888","answer":"False","correct":"1"}]},{"question":"2. When a government such as the US government voluntarily constrains itself to borrow to cover its net spending position, it substitutes its spending for the borrowed funds and logically reduces the non-government capacity to spend.","ID":"2377","explanation":"","answers":[{"ID":"11889","answer":"True","correct":"0"},{"ID":"11890","answer":"False","correct":"1"}]},{"question":"3. The crucial difference between a monetary system based on the convertible currency backed by gold and a fiat currency monetary is that under the former system:","ID":"2378","explanation":"","answers":[{"ID":"11891","answer":"excessive national government spending led to inflation.","correct":"0"},{"ID":"11892","answer":"the national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"11893","answer":"the national government could not use net spending to achieve full employment.","correct":"0"}]}]}, {"ID":"653","name":"Quiz 2021 - 38","added_on":"2021-09-16 04:49:24","questions":[{"question":"1. Using national accounting rules which dictate that the government balance is always equal to the non-government balance with an opposite sign, we can conclude that if the public sector successfully achieves a fiscal surplus then the private sector must be spending more than it is earning (that is, running a deficit).","ID":"2379","explanation":"","answers":[{"ID":"11913","answer":"False","correct":"1"},{"ID":"11912","answer":"True","correct":"0"}]},{"question":"2. Modern Monetary Theory (MMT) denies that the stock of aggregate spending can exceed the capacity of the productive sector and cause inflation.","ID":"2380","explanation":"","answers":[{"ID":"11915","answer":"False","correct":"0"},{"ID":"11914","answer":"True","correct":"1"}]},{"question":"3. Assume that the government increases spending by $200 billion at the start of each year and maintains this policy for the next three years from now. Economists estimate the spending multiplier to be 2 and the impact is exhausted within each year (all induced consumption is completed within 12 months). The tax multiplier is estimated to be equal to 1 and the current average tax rate is equal to 25 per cent (so tax revenue rises by 25 cents for every extra dollar of GDP produced ). What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"2381","explanation":"","answers":[{"ID":"11909","answer":"$400 billion.","correct":"0"},{"ID":"11908","answer":"$1,200 billion.","correct":"1"},{"ID":"11910","answer":"$300 billion.","correct":"0"},{"ID":"11911","answer":"$900 billion.","correct":"0"}]}]}, {"ID":"654","name":"Quiz 2021 - 39","added_on":"2021-09-23 23:37:44","questions":[{"question":"1. If the external sector was running a surplus equivalent to 4 per cent of GDP, and the sum of all the private sector spending plans indicated it was desiring to run a surplus overall equivalent to 6 per cent, then the government could safely plan on achieving a fiscal surplus of 2 per cent of GDP.","ID":"2382","explanation":"","answers":[{"ID":"11931","answer":"False","correct":"1"},{"ID":"11930","answer":"True","correct":"0"}]},{"question":"2. The automatic stabilisers work counter-cyclically without any discretionary changes by government and push the fiscal balance back to its appropriate level after a major cyclical disturbance.","ID":"2383","explanation":"","answers":[{"ID":"11929","answer":"False","correct":"1"},{"ID":"11928","answer":"True","correct":"0"}]},{"question":"3. The monetary base always adjusts by increasing when commercial banks increase their loans.","ID":"2384","explanation":"","answers":[{"ID":"11927","answer":"False","correct":"0"},{"ID":"11926","answer":"True","correct":"1"}]}]}, {"ID":"655","name":"Quiz 2021 - 40","added_on":"2021-09-30 23:50:43","questions":[{"question":"1. The distinction between structural and the cyclical components of the final government balance helps us to determine the direction of the discretionary fiscal policy stance of the government. In that context, which of the following situations represents the more expansionary outcome:","ID":"2385","explanation":"","answers":[{"ID":"11943","answer":"You cannot tell because you do not know the decomposition between the cyclical and structural components.","correct":"0"},{"ID":"11941","answer":"A government deficit equivalent to 5 per cent of GDP.","correct":"1"},{"ID":"11942","answer":"A government deficit equivalent to 3 per cent of GDP.","correct":"0"}]},{"question":"2. If private domestic investment is greater than private domestic saving and the current account is in deficit then the government balance has to be in deficit at all levels of GDP.","ID":"2386","explanation":"","answers":[{"ID":"11951","answer":"False","correct":"1"},{"ID":"11950","answer":"True","correct":"0"}]},{"question":"3. If a central bank continues to use Quantitative Easing to accompany net public spending, it would still require debt issuance to support a non-zero policy interest rate.","ID":"2387","explanation":"","answers":[{"ID":"11949","answer":"False","correct":"1"},{"ID":"11948","answer":"True","correct":"0"}]}]}, {"ID":"656","name":"Quiz 2021 - 41","added_on":"2021-10-07 21:38:26","questions":[{"question":"1. Assuming the expenditure multiplier is greater than 1, if the government increases its deficit they will have a greatest impact on aggregate demand if there are no offsetting monetary operations by the central bank (government bond sales) draining the excess reserves created.","ID":"2388","explanation":"","answers":[{"ID":"11959","answer":"False","correct":"1"},{"ID":"11958","answer":"True","correct":"0"}]},{"question":"2. If the government achieves in reducing its fiscal deficit by say $10 billion, the net financial assets destroyed by this withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"2389","explanation":"","answers":[{"ID":"11961","answer":"False","correct":"1"},{"ID":"11960","answer":"True","correct":"0"}]},{"question":"3. Which government deficit outcome is the most expansionary?","ID":"2390","explanation":"","answers":[{"ID":"11966","answer":"Overall deficit of 1 per cent of GDP.","correct":"0"},{"ID":"11965","answer":"Structural deficit of 1 per cent of GDP.","correct":"0"},{"ID":"11967","answer":"Overall deficit of 2 per cent of GDP.","correct":"1"}]}]}, {"ID":"657","name":"Quiz 2021 - 42","added_on":"2021-10-14 19:45:52","questions":[{"question":"1. A nation can run a government sector surplus, which is larger as a proportion to GDP than the external deficit, while the private domestic sector is spending more than they are earning.","ID":"2391","explanation":"","answers":[{"ID":"11981","answer":"False","correct":"0"},{"ID":"11980","answer":"True","correct":"1"}]},{"question":"2. The automatic stabilisers built into national government fiscal policy always operate in a counter-cyclical manner.","ID":"2392","explanation":"","answers":[{"ID":"11977","answer":"False","correct":"0"},{"ID":"11976","answer":"True","correct":"1"}]},{"question":"3. Sovereign government spending becomes more costly when the bond markets push yields on new public bond issues up.","ID":"2393","explanation":"","answers":[{"ID":"11979","answer":"False","correct":"1"},{"ID":"11978","answer":"True","correct":"0"}]}]}, {"ID":"658","name":"Quiz 2021 - 43","added_on":"2021-10-21 22:47:22","questions":[{"question":"1. A nation can export less than the sum of imports, net factor income (such as interest and dividends) and net transfer payments (such as foreign aid) and run a government surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","ID":"2394","explanation":"","answers":[{"ID":"11989","answer":"False","correct":"1"},{"ID":"11988","answer":"True","correct":"0"}]},{"question":"2. For workers to regain a larger share of national income, nominal wages have to grow faster than inflation - that is, the real wage has to rise.","ID":"2395","explanation":"","answers":[{"ID":"11991","answer":"False","correct":"1"},{"ID":"11990","answer":"True","correct":"0"}]},{"question":"3. Say, we form the view that over the next year: (a) the average working week will be constant in hours; (b) real GDP growth rate will be 3 per cent; (c) output per unit of labour input (persons) will grow at 1.5 per cent; and (d) the labour force will maintain a growth rate of 1.5 per cent per annum. We would project that the unemployment rate:n","ID":"2396","explanation":"","answers":[{"ID":"11992","answer":"Will rise in the coming year by 1.5 per cent.","correct":"0"},{"ID":"11993","answer":"Will fall in the coming year by 1.5 per cent.","correct":"0"},{"ID":"11994","answer":"Will be unchanged.","correct":"1"}]}]}, {"ID":"659","name":"Quiz 2021 - 44","added_on":"2021-10-28 20:01:52","questions":[{"question":"1. Assuming the expenditure multiplier is greater than 1, if the government increases its deficit they will have a greatest impact on aggregate demand if there are no offsetting monetary operations by the central bank (government bond sales) draining the excess reserves created.","ID":"2397","explanation":"","answers":[{"ID":"12002","answer":"False","correct":"1"},{"ID":"12001","answer":"True","correct":"0"}]},{"question":"2. If the government achieves in reducing its fiscal deficit by say $10 billion, the net financial assets destroyed by this withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"2398","explanation":"","answers":[{"ID":"12004","answer":"False","correct":"1"},{"ID":"12003","answer":"True","correct":"0"}]},{"question":"3. Which government deficit outcome is the most expansionary?","ID":"2399","explanation":"","answers":[{"ID":"12005","answer":"1 per cent of GDP.","correct":"0"},{"ID":"12006","answer":"2 per cent of GDP.","correct":"0"},{"ID":"12007","answer":"3 per cent of GDP.","correct":"1"},{"ID":"12008","answer":"Cannot tell because it depends on the decomposition of the structural and cyclical components.","correct":"0"}]}]}, {"ID":"660","name":"Quiz 2021 - 45","added_on":"2021-11-04 21:22:53","questions":[{"question":"1. Only one of the following propositions is possible for a nation with an external deficit over any given period (with all balances expressed as a per cent of GDP):","ID":"2400","explanation":"","answers":[{"ID":"12015","answer":"A public surplus of equal size to the external deficit, with the private domestic sector saving overall.","correct":"0"},{"ID":"12016","answer":"A public surplus of equal size to the external deficit, with the private domestic sector dis-saving overall.","correct":"1"},{"ID":"12017","answer":"A public surplus larger than the external deficit, with the private domestic sector saving overall","correct":"0"}]},{"question":"2. If in attempting to estimate the cyclical component of a government fiscal outcome we underestimate the potential capacity of an economy, we will conclude that the government"s discretionary fiscal position is less expansionary than it actually is.","ID":"2401","explanation":"","answers":[{"ID":"12019","answer":"False","correct":"1"},{"ID":"12018","answer":"True","correct":"0"}]},{"question":"3. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.","ID":"2402","explanation":"","answers":[{"ID":"12021","answer":"False","correct":"1"},{"ID":"12020","answer":"True ","correct":"0"}]}]}, {"ID":"661","name":"Quiz 2021 - 46","added_on":"2021-11-11 00:38:52","questions":[{"question":"1. If workers desire real wage gains then they must maintain nominal wages growth equal to the growth in labour productivity.","ID":"2403","explanation":"","answers":[{"ID":"12031","answer":"False","correct":"1"},{"ID":"12030","answer":"True","correct":"0"}]},{"question":"2. Assume the central bank keeps the inflation rate steady and equal to the nominal interest rate. Under these monetary conditions, a government can push the primary fiscal balance into surplus and drive down the public debt ratio even if the fiscal austerity causes a recession.","ID":"2404","explanation":"","answers":[{"ID":"12033","answer":"False","correct":"0"},{"ID":"12032","answer":"True","correct":"1"}]},{"question":"3. Suppose a government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private domestic sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.","ID":"2405","explanation":"","answers":[{"ID":"12035","answer":"False","correct":"0"},{"ID":"12034","answer":"True","correct":"1"}]}]}, {"ID":"662","name":"Quiz 2021 - 47","added_on":"2021-11-18 23:51:57","questions":[{"question":"1. A government can always eliminate unemployment by hiring workers to digs holes and fill them in again each day. But this option will not have the same impact on current economic growth ($-for-$) as a private investment plan which constructs a new factory.","ID":"2406","explanation":"","answers":[{"ID":"12043","answer":"False","correct":"1"},{"ID":"12042","answer":"True ","correct":"0"}]},{"question":"2. Economists note that the automatic stabilisers increase fiscal deficits (or reduce fiscal surpluses) in times of slack aggregate demand. This sensitivity of the fiscal outcome to the economic cycle could be eliminated if the government followed a fiscal rule such that it had to balance its spending and taxation revenue at all times.","ID":"2407","explanation":"","answers":[{"ID":"12045","answer":"False","correct":"1"},{"ID":"12044","answer":"True","correct":"0"}]},{"question":"3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.","ID":"2408","explanation":"","answers":[{"ID":"12047","answer":"False","correct":"0"},{"ID":"12046","answer":"True","correct":"1"}]}]}, {"ID":"663","name":"Quiz 2021 - 48","added_on":"2021-11-26 00:00:38","questions":[{"question":"1. When the government matches its deficit with debt-issuance it changes the portfolio of wealth held in the non-government sector. The impact on purchasing power is equivalent to a leakage from the expenditure system (akin to taxation, saving or imports) which reduces the expansionary impact of the government deficit spending.","ID":"2409","explanation":"","answers":[{"ID":"12055","answer":"False","correct":"1"},{"ID":"12054","answer":"True","correct":"0"}]},{"question":"2. A public employment guarantee program, which required workers to attend a government centre each day and do jigsaw puzzles, will have the same impact on national income as when a private company hired workers to build cars to meet market demand and are paid an equivalent wage.","ID":"2410","explanation":"","answers":[{"ID":"12062","answer":"False","correct":"0"},{"ID":"12061","answer":"True","correct":"1"}]},{"question":"3. A fiscal deficit of 2 per cent of GDP is less expansionary than a deficit of 3 per cent of GDP.","ID":"2411","explanation":"","answers":[{"ID":"12064","answer":"True","correct":"1"},{"ID":"12063","answer":"We would need to know the structural and cyclical components to answer this question.","correct":"0"},{"ID":"12065","answer":"False","correct":"0"}]}]}, {"ID":"664","name":"Quiz 2021 - 49","added_on":"2021-12-02 04:16:28","questions":[{"question":"1. Like anything in abundance, the value of the currency has to decline when there is more of circulating in the economy.","ID":"2412","explanation":"","answers":[{"ID":"12073","answer":"False","correct":"1"},{"ID":"12072","answer":"True","correct":"0"}]},{"question":"2. A fiscal rule at the national government level that required its fiscal balance to be in balance at all times would eliminate swings in the balance driven by the automatic stabilisers.","ID":"2413","explanation":"","answers":[{"ID":"12075","answer":"False","correct":"1"},{"ID":"12074","answer":"True","correct":"0"}]},{"question":"3. The private domestic sector will save overall even with a government fiscal surplus as long as net exports are positive.","ID":"2414","explanation":"","answers":[{"ID":"12077","answer":"False","correct":"1"},{"ID":"12076","answer":"True","correct":"0"}]}]}, {"ID":"665","name":"Quiz 2021 - 50","added_on":"2021-12-09 04:19:20","questions":[{"question":"1. During the American Civil War, the Confederate states experienced rising inflation as a result of their war spending in 1861. The Confederate Government could have eased the inflationary impact of this spending by issuing more bonds than it did.","ID":"2415","explanation":"","answers":[{"ID":"12085","answer":"False","correct":"1"},{"ID":"12084","answer":"True","correct":"0"}]},{"question":"2. Government deficits can crowd out private spending.","ID":"2416","explanation":"","answers":[{"ID":"12087","answer":"False","correct":"0"},{"ID":"12086","answer":"True","correct":"1"}]},{"question":"3. If there is an external deficit, then government deficits are required if private households are to save.","ID":"2417","explanation":"","answers":[{"ID":"12089","answer":"False","correct":"1"},{"ID":"12088","answer":"True","correct":"0"}]}]}, {"ID":"666","name":"Quiz 2021 - 51","added_on":"2021-12-16 20:59:35","questions":[{"question":"1. In most nations at present, both the government and the private domestic sectors are carrying historically large debt ratios. However, under current public sector debt-issuance arrangements, only one of these sectors can reduce its debt level at a time.","ID":"2418","explanation":"","answers":[{"ID":"12097","answer":"False","correct":"1"},{"ID":"12096","answer":"True","correct":"0"}]},{"question":"2. Workers can enjoy a stable share of GDP over time if their money wages increase in line with labour productivity.","ID":"2419","explanation":"","answers":[{"ID":"12101","answer":"False","correct":"1"},{"ID":"12100","answer":"True","correct":"0"}]},{"question":"3. The tax revenue a government receives constrains the real spending capacity of a sovereign government.","ID":"2420","explanation":"","answers":[{"ID":"12103","answer":"False","correct":"0"},{"ID":"12102","answer":"True","correct":"1"}]}]}, {"ID":"667","name":"Quiz 2021 - 52","added_on":"2021-12-23 20:27:39","questions":[{"question":"1. The automatic stabilisers increase fiscal deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the fiscal outcome to the business cycle would be eliminated if the government followed a fiscal rule that forced them to balance spending and taxation at all times.","ID":"2421","explanation":"","answers":[{"ID":"12115","answer":"False","correct":"1"},{"ID":"12114","answer":"True","correct":"0"}]},{"question":"2. If a nation is enjoying an external deficit, then one other sector must be spending more than it is earning.","ID":"2422","explanation":"","answers":[{"ID":"12117","answer":"False","correct":"0"},{"ID":"12116","answer":"True","correct":"1"}]},{"question":"3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.","ID":"2423","explanation":"","answers":[{"ID":"12119","answer":"False","correct":"0"},{"ID":"12118","answer":"True","correct":"1"}]},{"question":"4. Special Xmas Holiday Question: Santa is having trouble keeping his sled and related delivery infrastructure in working order. But he knows","ID":"2424","explanation":"","answers":[{"ID":"12125","answer":"The Bishop in Italy was right, there is no Santa kids.","correct":"0"},{"ID":"12124","answer":"he has been told that the household budget is like a government fiscal balance and he understands the currency-issuing government has no financial constraints so he cannot work out why suppliers wont just accept his cheques.","correct":"0"},{"ID":"12123","answer":"that he is a household and thus a user of the currency and will have to save, earn or borrow to generate the funds necessary to maintain his equipment.","correct":"1"}]},{"question":"5. We know that Santa has rejected the anti-vaxxer message.","ID":"2425","explanation":"","answers":[{"ID":"12131","answer":"False","correct":"0"},{"ID":"12130","answer":" True","correct":"1"}]}]}, {"ID":"668","name":"Quiz 2022 - 1","added_on":"2021-12-30 20:36:51","questions":[{"question":"1. . In general, the estimates provided by the organisations such as the OECD and IMF of the impact of the automatic stabilisers are biased downwards.","ID":"2426","explanation":"","answers":[{"ID":"12139","answer":"False","correct":"0"},{"ID":"12138","answer":"True","correct":"1"}]},{"question":"2. If there is an external deficit, efforts by the private domestic sector to increase its overall saving as a percentage of GDP, will ensure the government fiscal position is in deficit, irrespective of what the government desires.","ID":"2427","explanation":"","answers":[{"ID":"12141","answer":"False","correct":"0"},{"ID":"12140","answer":"True","correct":"1"}]},{"question":"3. When a government runs a continuous fiscal deficit public spending builds up over time.","ID":"2428","explanation":"","answers":[{"ID":"12143","answer":"False","correct":"1"},{"ID":"12142","answer":"True","correct":"0"}]}]}, {"ID":"669","name":"Quiz 2022 - 2","added_on":"2022-01-06 19:27:45","questions":[{"question":"The automatic stabilisers always support growth when the economic growth is slowing.","ID":"2429","explanation":"","answers":[{"ID":"12144","answer":"True","correct":"1"},{"ID":"12145","answer":"False","correct":"0"}]},{"question":"2. Continuous fiscal deficits are more likely to present an inflation risk than one-off deficits designed to meet a short-term private spending decline.","ID":"2430","explanation":"","answers":[{"ID":"12146","answer":"True","correct":"0"},{"ID":"12147","answer":"False","correct":"1"}]},{"question":"3. To maintain financial stability, the monetary base has to be driven by changes in the money supply.","ID":"2431","explanation":"","answers":[{"ID":"12148","answer":"True","correct":"1"},{"ID":"12149","answer":"False","correct":"0"}]}]}, {"ID":"670","name":"Quiz 2022 - 3","added_on":"2022-01-13 21:23:24","questions":[{"question":"1. Unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government, which issues its own currency can always roll over its \\\"own currency\\\" debt obligations and never has to pay them back.","ID":"2432","explanation":"","answers":[{"ID":"12163","answer":"False","correct":"1"},{"ID":"12162","answer":"True","correct":"0"}]},{"question":"2. Standing facilities that central banks maintain means that the monetary base always adjusts to the changes in the money supply.","ID":"2433","explanation":"","answers":[{"ID":"12153","answer":"True","correct":"1"},{"ID":"12154","answer":"False","correct":"0"}]},{"question":"3. Assume that the current account deficit of a nation is stable and equal to 2 per cent of GDP throughout a complete economic cycle. The government is imposing fiscal austerity and at a particular point over that cycle we observe a government surplus equal to 3 per cent of GDP but which over the complete economic cycle will end up being balanced. We also would know two things about the private domestic sector balance - at the observation point and on average over the cycle. It would be in:","ID":"2434","explanation":"","answers":[{"ID":"12155","answer":"(a) deficit by 5 per cent of GDP but on average over the cycle in surplus equal to 2 per cent of GDP.","correct":"0"},{"ID":"12156","answer":"(b) deficit by 5 per cent of GDP but on average over the cycle in deficit equal to 2 per cent of GDP.","correct":"1"},{"ID":"12157","answer":"(c) deficit by 1 per cent of GDP but on average over the cycle in surplus equal to 2 per cent of GDP.","correct":"0"},{"ID":"12158","answer":"(d) deficit by 1 per cent of GDP but on average over the cycle in deficit equal to 2 per cent of GDP.","correct":"0"}]}]}, {"ID":"671","name":"Quiz 2022 - 4","added_on":"2022-01-20 21:07:06","questions":[{"question":"1. A currency-issuing government can always ensure there is first-class service provision to meet the demands of an ageing population.","ID":"2435","explanation":"","answers":[{"ID":"12177","answer":"False","correct":"1"},{"ID":"12176","answer":"True","correct":"0"}]},{"question":"2. For a nation running a small current account deficit (close to balance), the government fiscal position will always be in deficit if the domestic private sector is spending less overall than it earns.","ID":"2436","explanation":"","answers":[{"ID":"12173","answer":"False","correct":"0"},{"ID":"12172","answer":"True","correct":"1"}]},{"question":"3. Ignoring laws to the contrary, a central bank currently targetting a 2 per cent short-term policy rate, cannot directly purchase treasury debt to facilitate the national governments fiscal deficit (that is, \\\"monetise the deficit\\\") and continue to maintain its policy rate at 2 per cent.","ID":"2437","explanation":"","answers":[{"ID":"12175","answer":"False","correct":"1"},{"ID":"12174","answer":"True","correct":"0"}]}]}, {"ID":"672","name":"Quiz 2022 - 5","added_on":"2022-01-27 20:20:32","questions":[{"question":"1. As a matter of accounting, the financial assets held by the non-government sector immediately rise $-for-$ when a sovereign government issues debt.","ID":"2438","explanation":"","answers":[{"ID":"12185","answer":"False","correct":"1"},{"ID":"12184","answer":"True","correct":"0"}]},{"question":"2. When government bond yields for new issues start to rise, government spending becomes more expensive.","ID":"2439","explanation":"","answers":[{"ID":"12187","answer":"False","correct":"1"},{"ID":"12186","answer":"True","correct":"0"}]},{"question":"3. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the domestic private sector cannot reduce its overall debt levels (by saving) without incurring employment losses.","ID":"2440","explanation":"","answers":[{"ID":"12189","answer":"False","correct":"0"},{"ID":"12188","answer":"True","correct":"1"}]}]}, {"ID":"673","name":"Quiz 2022 - 6","added_on":"2022-02-04 01:06:06","questions":[{"question":"1. Bank lending moved from being reserve-constrained to capital-constrained once the prudential authorities relaxed reserve ratio requirements and the Bank of International Settlements introduced the Basel framework for capital adequacy.","ID":"2441","explanation":"","answers":[{"ID":"12197","answer":"False","correct":"1"},{"ID":"12196","answer":"True","correct":"0"}]},{"question":"2. By increasing tax rates a sovereign government increases its capacity to spend more without increasing inflation.","ID":"2442","explanation":"","answers":[{"ID":"12199","answer":"False","correct":"0"},{"ID":"12198","answer":"True ","correct":"1"}]},{"question":"3. For a nation running a small external deficit, the government will always be in deficit if the domestic private sector is saving overall.","ID":"2443","explanation":"","answers":[{"ID":"12203","answer":"False","correct":"0"},{"ID":"12202","answer":"True ","correct":"1"}]}]}, {"ID":"674","name":"Quiz 2022 - 7","added_on":"2022-02-10 22:56:12","questions":[{"question":"1. A nation that issues its own currency and floats it on international foreign exchange markets faces no solvency risk with respect to the debt it issues.","ID":"2444","explanation":"","answers":[{"ID":"12211","answer":"False","correct":"1"},{"ID":"12210","answer":"True","correct":"0"}]},{"question":"2. By investing fiscal surpluses in a sovereign fund a government creates more space for non-inflationary public spending in the future.","ID":"2445","explanation":"","answers":[{"ID":"12215","answer":"False","correct":"1"},{"ID":"12214","answer":"True","correct":"0"}]},{"question":"3. Consider a government that increases spending by $100 billion in the each of the next three years. Economists estimate the spending multiplier (which is the multiple by which income increases for a given injection of spending) to be 1.5 and the impact is immediate and exhausted in each year. They also estimate that the import propensity is 0.2 (meaning that imports rise by 20 cents for every dollar generated in the economy). They also estimate the tax multiplier (impact of tax changes on income) to be equal to 1 and the current tax rate is equal to 30 per cent. So for every extra dollar produced, tax revenue rises by 30 cents. Which of the following statements is correct? The cumulative impact of this fiscal expansion on nominal GDP is:","ID":"2446","explanation":"","answers":[{"ID":"12216","answer":"$450 billion and the private sector saves 24 cents out of every extra dollar generated.","correct":"1"},{"ID":"12217","answer":"$450 billion and the private sector saves 28 cents out of every extra dollar generated.","correct":"0"},{"ID":"12218","answer":"$315 billion and the private sector saves 24 cents out of every extra dollar generated.","correct":"0"},{"ID":"12219","answer":"$315 billion and the private sector saves 28 cents out of every extra dollar generated.","correct":"0"}]}]}, {"ID":"675","name":"Quiz 2022 - 8","added_on":"2022-02-17 05:55:51","questions":[{"question":"1. If there is more money in the economy its value always declines.","ID":"2447","explanation":"","answers":[{"ID":"12227","answer":"False","correct":"1"},{"ID":"12226","answer":"True","correct":"0"}]},{"question":"2. A public works program that digs holes and fills them in again has exactly the same impact on current economic growth ($-for-$) as a private investment plan which constructs a new factory.","ID":"2448","explanation":"","answers":[{"ID":"12229","answer":"False","correct":"0"},{"ID":"12228","answer":"True","correct":"1"}]},{"question":"3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, the presence of high inflation reduces the effectiveness of this strategy.","ID":"2449","explanation":"","answers":[{"ID":"12231","answer":"False","correct":"0"},{"ID":"12230","answer":"True","correct":"1"}]}]}, {"ID":"676","name":"Quiz 2022 - 9","added_on":"2022-02-24 21:32:10","questions":[{"question":"1. We are told that a country is running a small current account deficit and that the private domestic sector is saving overall. However, until we know the relative magnitudes of these balances, we are unable to conclude the state of the fiscal balance.","ID":"2450","explanation":"","answers":[{"ID":"12232","answer":"True","correct":"0"},{"ID":"12233","answer":"False","correct":"1"}]},{"question":"2. The initial stock of non-government sector wealth is invariant to the decision by government to issues bonds to match its deficit spending as against not issuing any bonds.","ID":"2451","explanation":"","answers":[{"ID":"12234","answer":"True","correct":"1"},{"ID":"12235","answer":"False","correct":"0"}]},{"question":"3. The stock of government spending continually rises when there are rising fiscal deficits.","ID":"2452","explanation":"","answers":[{"ID":"12239","answer":"False","correct":"1"},{"ID":"12238","answer":"True","correct":"0"}]}]}, {"ID":"677","name":"Quiz 2022 - 10","added_on":"2022-03-03 21:09:24","questions":[{"question":"1. An advantage of fiscal deficits is that the non-government sector becomes immediately wealthier because the sovereign government issues debt to private wealth holders.","ID":"2453","explanation":"","answers":[{"ID":"12253","answer":"False","correct":"1"},{"ID":"12252","answer":"True","correct":"0"}]},{"question":"2. In a fixed coupon government bond auction, the higher is the demand for the bonds the lower the yields will be at that asset maturity, which suggests that higher fiscal deficits will eventually drive short-term interest rates down.","ID":"2454","explanation":"","answers":[{"ID":"12247","answer":"False","correct":"1"},{"ID":"12246","answer":"True","correct":"0"}]},{"question":"3. In a situation where the private domestic sector decides to increase its overall saving, the economy can still grow even if the national government had decided to impose fiscal austerity.","ID":"2455","explanation":"","answers":[{"ID":"12251","answer":"False","correct":"0"},{"ID":"12250","answer":"True","correct":"1"}]}]}, {"ID":"678","name":"Quiz 2022 - 11","added_on":"2022-04-07 21:25:35","questions":[{"question":"1. When there is an external deficit, the private domestic sector can reduce its overall indebtedness as long as the government runs a fiscal deficit.","ID":"2456","explanation":"","answers":[{"ID":"12267","answer":"False","correct":"1"},{"ID":"12266","answer":"True","correct":"0"}]},{"question":"2. When a sovereign government issues debt to match its fiscal deficit it has no impact on the overall holdings of financial assets held by the non-government sector.","ID":"2457","explanation":"","answers":[{"ID":"12263","answer":"False","correct":"0"},{"ID":"12262","answer":"True ","correct":"1"}]},{"question":"3. When 10-year government bond yields rise you know that bond markets are demanding increased risk coverage for these assets.","ID":"2458","explanation":"","answers":[{"ID":"12265","answer":"False","correct":"1"},{"ID":"12264","answer":"True","correct":"0"}]}]}, {"ID":"679","name":"Quiz 2022 - 12","added_on":"2022-04-14 23:46:53","questions":[{"question":"1. Assume that a nation is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would find","ID":"2459","explanation":"","answers":[{"ID":"12268","answer":"Cannot determine - we would need to know the scale of private domestic sector saving as a % of GDPn","correct":"0"},{"ID":"12269","answer":"A fiscal deficit","correct":"1"},{"ID":"12270","answer":"A fiscal surplus","correct":"0"}]},{"question":"2. Government bonds constitute non-government financial wealth. Thus, a fiscal deficit will add to non-government sector net worth only if it is accompanied by the issuance of new bonds.n","ID":"2460","explanation":"","answers":[{"ID":"12271","answer":"True","correct":"0"},{"ID":"12272","answer":"False","correct":"1"}]},{"question":"3. A government wanting to achieve full employment after a deep recession will succeed if it uses discretionary fiscal policy to ensure real GDP growth gets back on trend.","ID":"2461","explanation":"","answers":[{"ID":"12273","answer":"True","correct":"0"},{"ID":"12274","answer":"False","correct":"1"}]}]}, {"ID":"680","name":"Quiz 2022 - 13","added_on":"2022-04-21 21:10:23","questions":[{"question":"1. When there is an external deficit, the private domestic sector can reduce its overall indebtedness as long as the government supports saving by running a deficit.","ID":"2462","explanation":"","answers":[{"ID":"12275","answer":"True","correct":"0"},{"ID":"12276","answer":"False","correct":"1"}]},{"question":"2. When a sovereign government issues debt it has no immediate impact on the overall holdings of financial assets held by the non-government sector.","ID":"2463","explanation":"","answers":[{"ID":"12287","answer":"False","correct":"0"},{"ID":"12286","answer":"True","correct":"1"}]},{"question":"3. When 10-year government bond yields rise you know that bond markets are demanding increased risk coverage for these assets.","ID":"2464","explanation":"","answers":[{"ID":"12280","answer":"True","correct":"0"},{"ID":"12281","answer":"False","correct":"1"}]}]}, {"ID":"681","name":"Quiz 2022 - 14","added_on":"2022-04-28 08:09:29","questions":[{"question":"1. A sovereign national government can run a balanced fiscal position over the economic cycle (peak to peak) as long as it accepts that after all the spending adjustments are exhausted that the private domestic balance will only be in surplus if the external balance is in surplus when averaged out over the same cycle.","ID":"2465","explanation":"","answers":[{"ID":"12295","answer":"False","correct":"0"},{"ID":"12294","answer":"True","correct":"1"}]},{"question":"2. An understanding of Modern Monetary Theory (MMT) allows us to understand that mass unemployment can arise if the growth in real wages are excessive.","ID":"2466","explanation":"","answers":[{"ID":"12297","answer":"False","correct":"0"},{"ID":"12296","answer":"True","correct":"1"}]},{"question":"3. Only one of the following statements is definitely true when you observe rising government bond yields for new issues:","ID":"2467","explanation":"","answers":[{"ID":"12298","answer":"Government spending is becoming more expensive.","correct":"0"},{"ID":"12299","answer":"Bond prices are falling in response to falling demand.","correct":"1"},{"ID":"12300","answer":"Government spending is increasing the cost of borrowing for private investors.","correct":"0"}]}]}, {"ID":"682","name":"Quiz 2022 - 15","added_on":"2022-05-05 22:38:39","questions":[{"question":"1. Assume inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting. If government spending increases by $X dollars and private investment and exports are unchanged, then nominal income will continue growing until the sum of the change in taxation revenue, import spending and household saving rises by $X dollars.","ID":"2468","explanation":"","answers":[{"ID":"12310","answer":"False","correct":"0"},{"ID":"12309","answer":"True","correct":"1"},{"ID":"12311","answer":"Maybe","correct":"0"}]},{"question":"2. The crucial difference between a monetary system based on the gold standard world and a fiat currency monetary is, that under the former system:","ID":"2469","explanation":"","answers":[{"ID":"12312","answer":"excessive national government spending led to inflation.","correct":"0"},{"ID":"12313","answer":"the national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"12314","answer":"the national government could not use net spending to achieve full employment.","correct":"0"}]},{"question":"3. When the national government"s fiscal balance moves into deficit:","ID":"2470","explanation":"","answers":[{"ID":"12315","answer":"it is a sign that the government is trying to stimulate the economy.","correct":"0"},{"ID":"12316","answer":"it is a sign that the government is worried that unemployment is rising.","correct":"0"},{"ID":"12317","answer":"you cannot conclude anything about the government"s policy intentions.","correct":"1"}]}]}, {"ID":"683","name":"Quiz 2022 - 16","added_on":"2022-05-12 19:52:52","questions":[{"question":"1. Mainstream economists claim government deficits "crowd out" private spending because deficits force interest rates up. Modern Monetary Theory (MMT) denies that crowding out can occur.","ID":"2471","explanation":"","answers":[{"ID":"12325","answer":"False","correct":"1"},{"ID":"12324","answer":"True","correct":"0"}]},{"question":"2. A rising government deficit will always allow the private domestic sector to increase its overall saving in nominal terms.","ID":"2472","explanation":"","answers":[{"ID":"12333","answer":"False","correct":"1"},{"ID":"12332","answer":"True","correct":"0"}]},{"question":"3. Assume the government increases spending by $100 billion in the each of the next three years from now. Economists estimate the spending multiplier to be 1.5 and the impact is immediate and exhausted in each year. They also estimate the tax multiplier (which captures the impact of rising tax rates on GDP) to be equal to 1 and the current average tax rate is equal to 30 per cent. What is the cumulative impact of this fiscal expansion on GDP after three years?","ID":"2473","explanation":"","answers":[{"ID":"12328","answer":"$135 billion.","correct":"0"},{"ID":"12329","answer":"$150 billion.","correct":"0"},{"ID":"12330","answer":"$315 billion.","correct":"0"},{"ID":"12331","answer":"$450 billion.","correct":"1"}]}]}, {"ID":"684","name":"Quiz 2022 - 17","added_on":"2022-05-19 23:05:44","questions":[{"question":"1. Central bankers are talking about ending their quantitative easing programs as an anti-inflationary strategy while governments are withdrawing of fiscal stimulus programs. Both policy shifts will destroy net financial assets in the non-government sector.","ID":"2474","explanation":"","answers":[{"ID":"12341","answer":"False","correct":"1"},{"ID":"12340","answer":"True","correct":"0"}]},{"question":"2. Australian workers found out officially this week that the real wage fell 2.7 per cent in the last 12 months. Given the growth in wages (the money you get paid) is lagging behind inflation while labour productivity is growing, then we can conclude that the profit share in GDP must be increasing.","ID":"2475","explanation":"","answers":[{"ID":"12343","answer":"False","correct":"0"},{"ID":"12342","answer":"True","correct":"1"}]},{"question":"3. The government is attempting to reduce the fiscal deficit. Private market orientated advisors tell them to cut government spending, whereas, the more civic-minded advisors argue that it is better to increase taxes in an equitable way than to engage in harsh spending cuts. Which policy option - a tax rate increase that will increase tax revenue at the current level of national income by $x or a spending cut of $x - will have the greater initial impact on aggregate demand?","ID":"2476","explanation":"","answers":[{"ID":"12350","answer":"Both will be equivalent","correct":"0"},{"ID":"12349","answer":"Spending cut","correct":"1"},{"ID":"12348","answer":"Tax rate increase","correct":"0"},{"ID":"12351","answer":"There is not enough information to answer this question","correct":"0"}]}]}, {"ID":"685","name":"Quiz 2022 - 18","added_on":"2022-05-27 03:02:59","questions":[{"question":"1. Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.","ID":"2477","explanation":"","answers":[{"ID":"12361","answer":"False","correct":"0"},{"ID":"12360","answer":"True","correct":"1"},{"ID":"12362","answer":"Maybe","correct":"0"}]},{"question":"2. For a nation running an external deficit, income adjustments will ensure that the government fiscal balance is in deficit if the domestic private sector is saving overall as a percentage of GDP.","ID":"2478","explanation":"","answers":[{"ID":"12364","answer":"False","correct":"0"},{"ID":"12363","answer":"True","correct":"1"}]},{"question":"3. Higher levels of taxation revenue ultimately permit the government to spend more.","ID":"2479","explanation":"","answers":[{"ID":"12366","answer":"False","correct":"0"},{"ID":"12365","answer":"True","correct":"1"}]}]}, {"ID":"686","name":"Quiz 2022 - 19","added_on":"2022-06-02 07:01:54","questions":[{"question":"1. Government spending which is accompanied by a bond sale to the non-government sector adds less to aggregate demand than would be the case if there was no bond sale.","ID":"2480","explanation":"","answers":[{"ID":"12374","answer":"False","correct":"1"},{"ID":"12373","answer":"True","correct":"0"}]},{"question":"2. If the external balance is always in surplus, then the government can safely run a fiscal surplus and not impede economic growth.","ID":"2481","explanation":"","answers":[{"ID":"12376","answer":"False","correct":"1"},{"ID":"12375","answer":"True","correct":"0"}]},{"question":"3. In a stock-flow consistent macroeconomics, we have to always trace the impact of flows during a period on the relevant stocks at the end of the period. Accordingly, government and private investment spending are two examples of flows that adds to the stock of aggregate spending which in turn impacts on GDP.","ID":"2482","explanation":"","answers":[{"ID":"12378","answer":"False","correct":"1"},{"ID":"12377","answer":"True","correct":"0"}]}]}, {"ID":"687","name":"Quiz 2022 - 20","added_on":"2022-06-05 19:33:25","questions":[{"question":"1. As the sense of emergency surrounding the pandemic seemingly has been forgotten, the European Commission will reinstate the restrictions imposed on deficit and debt ratios by the Stability and Growth Pact, which will increase the solvency risk of the 19 member states.","ID":"2483","explanation":"","answers":[{"ID":"12379","answer":"True","correct":"0"},{"ID":"12380","answer":"False","correct":"1"}]},{"question":"2. If the monthly Labour Force data shows that employment grew by 400 in net terms over the last month, unemployment rose by 10,700, and the participation rate fell by 0.1 points then we can conclude that:nnnn","ID":"2484","explanation":"","answers":[{"ID":"12388","answer":"The labour force grew faster than employment but you cannot tell what happened to the working age population from the information provided.","correct":"0"},{"ID":"12386","answer":"The labour force grew faster than employment but not as fast the working age population.","correct":"1"},{"ID":"12387","answer":"The working age population grew faster than employment and offset the decline in the labour force arising from the drop in the participation rate.","correct":"0"}]},{"question":"3. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"2485","explanation":"","answers":[{"ID":"12384","answer":"True","correct":"0"},{"ID":"12385","answer":"False","correct":"1"}]}]}, {"ID":"688","name":"Quiz 2022 - 21","added_on":"2022-06-17 02:13:24","questions":[{"question":"1. When a currency-issuing government voluntarily constrains itself ensure any fiscal deficits are matched by borrowing from the private sector, it reduces the funds available for private investment expenditure.","ID":"2486","explanation":"","answers":[{"ID":"12396","answer":"False","correct":"1"},{"ID":"12395","answer":"True","correct":"0"}]},{"question":"2. An increasing fiscal deficit tells us nothing about the government"s policy intentions.","ID":"2487","explanation":"","answers":[{"ID":"12398","answer":"False","correct":"0"},{"ID":"12397","answer":"True","correct":"1"}]},{"question":"3. The crucial difference between a monetary system based on the convertible currency backed by gold and a fiat currency monetary is that under the former system:","ID":"2488","explanation":"","answers":[{"ID":"12404","answer":"The national government could not use net spending to achieve full employment.","correct":"0"},{"ID":"12403","answer":"The national government had to issue debt to cover spending above taxation.","correct":"1"},{"ID":"12402","answer":"Excessive national government spending led to inflation.","correct":"0"},{"ID":"12405","answer":"None of the above.","correct":"0"}]}]}, {"ID":"689","name":"Quiz 2022 - 22","added_on":"2022-06-23 19:45:34","questions":[{"question":"1. If the external sector overall is in deficit, it is still possible for the private domestic sector and government sector to run surpluses and each pay down its debt as long as GDP growth is fast enough (the technical condition is that the rate of GDP growth has to be faster than the real interest rate).","ID":"2489","explanation":"","answers":[{"ID":"12413","answer":"False","correct":"1"},{"ID":"12412","answer":"True","correct":"0"}]},{"question":"2. National government debt (where there is currency sovereignty) is not really a liability because the government can just roll it over continuously and thus they never have to pay it back. This is different to a household, which not only has to service its debt but also has to repay them at the due date.","ID":"2490","explanation":"","answers":[{"ID":"12415","answer":"False","correct":"1"},{"ID":"12414","answer":"True","correct":"0"}]},{"question":"3. Even though the money multiplier found in macroeconomics textbooks is a flawed description of the way the monetary system operates, having some positive minimum reserve requirements does constrain credit creation activities of the private banks more than if you have no requirements other than the rule that balances have to be non-zero.","ID":"2491","explanation":"","answers":[{"ID":"12417","answer":"False","correct":"1"},{"ID":"12416","answer":"True","correct":"0"}]}]}, {"ID":"690","name":"Quiz 2022 - 23","added_on":"2022-06-30 21:52:45","questions":[{"question":"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:","ID":"2492","explanation":"","answers":[{"ID":"12424","answer":"Deficit of 1 per cent of GDP","correct":"1"},{"ID":"12425","answer":"Surplus of 1 per cent of GDP","correct":"0"}]},{"question":"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.","ID":"2493","explanation":"","answers":[{"ID":"12427","answer":"False","correct":"0"},{"ID":"12426","answer":"True","correct":"1"}]},{"question":"3. During a recession, the government can always restore full employment if it uses expansionary fiscal policy to restore trend real GDP growth.","ID":"2494","explanation":"","answers":[{"ID":"12429","answer":"False","correct":"1"},{"ID":"12428","answer":"True","correct":"0"}]}]}, {"ID":"691","name":"Quiz 2022 - 24","added_on":"2022-07-07 21:42:07","questions":[{"question":"1. The unemployed on income support benefits live off the hard work of those who pay taxes.","ID":"2495","explanation":"","answers":[{"ID":"12437","answer":"False","correct":"0"},{"ID":"12436","answer":"True","correct":"1"}]},{"question":"2. A potential problem with running continuous fiscal deficits is that the spending builds up over time which adds to inflationary pressures.","ID":"2496","explanation":"","answers":[{"ID":"12439","answer":"False","correct":"1"},{"ID":"12438","answer":"True","correct":"0"}]},{"question":"3. If private domestic investment is less than private domestic saving, and, the external sector is draining aggregate demand, then the government fiscal balance has to be in deficit no matter what level of GDP is produced.","ID":"2497","explanation":"","answers":[{"ID":"12441","answer":"False","correct":"0"},{"ID":"12440","answer":"True","correct":"1"}]}]}, {"ID":"692","name":"Quiz 2022 - 25","added_on":"2022-07-14 21:45:30","questions":[{"question":"1. If the external sector is in deficit overall and GDP growth rate is faster than the real interest rate, then:","ID":"2498","explanation":"","answers":[{"ID":"12454","answer":"Neither the private domestic sector or the government sector overall can pay down their debt liabilities.","correct":"0"},{"ID":"12453","answer":"Either the private domestic sector or the government sector overall can pay down their debt liabilities.","correct":"1"},{"ID":"12452","answer":"Both the private domestic sector and the government sector overall can pay down their respective debt liabilities.","correct":"0"}]},{"question":"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.","ID":"2499","explanation":"","answers":[{"ID":"12445","answer":"True","correct":"0"},{"ID":"12446","answer":"False","correct":"1"}]},{"question":"3. The fact that inflationary pressures have followed large scale quantitative easing programs conducted by central banks validates the mainstream Quantity Theory of Money, which claims that growth in the stock of money will be inflationary.","ID":"2500","explanation":"","answers":[{"ID":"12447","answer":"True","correct":"0"},{"ID":"12448","answer":"False","correct":"1"}]}]}, {"ID":"693","name":"Quiz 2022 - 26","added_on":"2022-07-21 06:31:20","questions":[{"question":"1. When economic growth resumes, the automatic stabilisers work to reduce government spending and increase taxes, which ensures that the government fiscal balance returns to its appropriate level. ","ID":"2501","explanation":"","answers":[{"ID":"12455","answer":"True","correct":"0"},{"ID":"12456","answer":"False","correct":"1"}]},{"question":"2. Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):","ID":"2502","explanation":"","answers":[{"ID":"12457","answer":"A nation can run a external deficit accompanied by a government sector surplus of equal size, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"12458","answer":"A nation can run a external deficit accompanied by a government sector surplus of equal size, while the private domestic sector is spending more than they are earning.","correct":"1"},{"ID":"12459","answer":"A nation can run a external deficit accompanied by a government sector surplus that is larger, while the private domestic sector is spending less than they are earning.","correct":"0"},{"ID":"12460","answer":"None of the above are possible as they all defy the sectoral balances accounting identity.","correct":"0"}]},{"question":"3. Broad money is a multiple of the monetary base which is what the money multiplier concept explains.","ID":"2503","explanation":"","answers":[{"ID":"12461","answer":"True","correct":"0"},{"ID":"12462","answer":"False","correct":"1"}]}]}, {"ID":"694","name":"Quiz 2022 - 27","added_on":"2022-07-28 20:51:30","questions":[{"question":"1. Over the last several decades, central banks and treasuries have used the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) to define full employment and calibrate their estimates of the state of the economic cycle. Accordingly, these estimates will typically be:","ID":"2504","explanation":"","answers":[{"ID":"12463","answer":" biased downwards indicating they think the economy is further away from full employment than it actually is.","correct":"0"},{"ID":"12464","answer":"biased upwards indicating they think that the economy is closer to full employment than it actually is.","correct":"1"},{"ID":"12465","answer":"difficult to assess because their forecasts are subject to forecasting inaccuracy.","correct":"0"}]},{"question":"2. When a sovereign government issues debt it logically:","ID":"2505","explanation":"","answers":[{"ID":"12466","answer":"increases the financial assets that are held by the non-government sector $-for-$.","correct":"0"},{"ID":"12467","answer":"has no impact on the overall holdings of financial assets held by the non-government sector $-for-$.","correct":"1"},{"ID":"12468","answer":"reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.","correct":"0"}]},{"question":"3. Only one of the following statements can be true when you observe rising government bond yields for new issues:","ID":"2506","explanation":"","answers":[{"ID":"12469","answer":"Government spending is becoming more expensive.","correct":"0"},{"ID":"12470","answer":"Bond prices are falling in response to demand.","correct":"1"},{"ID":"12471","answer":"Government spending is increasing the cost of borrowing for private investors.","correct":"0"}]}]}, {"ID":"695","name":"Quiz 2022 - 28","added_on":"2022-08-04 17:57:36","questions":[{"question":"1. A fiscal deficit equivalent to 3 per cent of GDP tells us that the government is adopting a less expansionary policy stance than if the fiscal deficit outcome was equivalent to 5 per cent of GDP.","ID":"2507","explanation":"","answers":[{"ID":"12479","answer":"False","correct":"1"},{"ID":"12478","answer":"True","correct":"0"}]},{"question":"2. When the government borrows from the non-government sector to match an increase in net public spending, the initial increase in aggregate demand is less than would be the case if there was no bond sale.","ID":"2508","explanation":"","answers":[{"ID":"12481","answer":"False","correct":"1"},{"ID":"12480","answer":"True","correct":"0"}]},{"question":"3. 3. Consider the following table which describes four different economies in terms of the behavioural parameters relating to the leakages to aggregate demand.nnAssume that in all four economies, there is idle capacity, the central bank holds all interest rates constant, inflation is constant and there is no changes in international competitiveness.nn
n\\\"\\\"n
nnWhich economy would deliver the largest national income bonus for a given discretionary expansion in government spending. ","ID":"2509","explanation":"","answers":[{"ID":"12489","answer":"Economy D","correct":"0"},{"ID":"12488","answer":"Economy C","correct":"0"},{"ID":"12487","answer":"Economy B","correct":"0"},{"ID":"12486","answer":"Economy A","correct":"1"}]}]}, {"ID":"696","name":"Quiz 2022 - 29","added_on":"2022-08-11 06:44:53","questions":[{"question":"1. In a fiat monetary system with an on-going external deficit, if a government wants the domestic private sector to reduce its overall debt levels without employment losses, then it has increase its fiscal deficit beyond the size of the external deficit.","ID":"2510","explanation":"","answers":[{"ID":"12497","answer":"False","correct":"0"},{"ID":"12496","answer":"True","correct":"1"}]},{"question":"2. The only time that a fiscal surplus represents increased national savings is when the government creates a sovereign fund.","ID":"2511","explanation":"","answers":[{"ID":"12499","answer":"False","correct":"1"},{"ID":"12498","answer":"True","correct":"0"}]},{"question":"3. The massive build-up of Chinese holdings of US government debt allowed US citizens to enjoy a higher material standard of living overall at the expense of the residents of China.","ID":"2512","explanation":"","answers":[{"ID":"12501","answer":"False","correct":"0"},{"ID":"12500","answer":"True","correct":"1"}]}]}, {"ID":"697","name":"Quiz 2022 - 30","added_on":"2022-08-18 23:31:45","questions":[{"question":"1. The distinction between structural and the cyclical components of the final government balance helps us to determine the direction of the discretionary fiscal policy stance of the government. In that context, which of the following situations represents the more expansionary outcome:n","ID":"2513","explanation":"","answers":[{"ID":"12508","answer":"A government deficit equivalent to 5 per cent of GDP.","correct":"1"},{"ID":"12509","answer":"A government deficit equivalent to 3 per cent of GDP.","correct":"0"},{"ID":"12510","answer":"You cannot tell because you do not know the decomposition between the cyclical and structural components.","correct":"0"}]},{"question":"2. If private domestic investment is greater than private domestic saving and the current account is in deficit then the government balance has to be in deficit at all levels of GDP.","ID":"2514","explanation":"","answers":[{"ID":"12516","answer":"False","correct":"1"},{"ID":"12515","answer":"True","correct":"0"}]},{"question":"3. If a central bank continues to use Quantitative Easing to accompany net public spending, it would still require debt issuance to support a non-zero policy interest rate.","ID":"2515","explanation":"","answers":[{"ID":"12514","answer":"False","correct":"1"},{"ID":"12513","answer":"True","correct":"0"}]}]}, {"ID":"698","name":"Quiz 2022 - 31","added_on":"2022-08-25 23:53:57","questions":[{"question":"1. A nation can run a government sector surplus, which is larger as a proportion to GDP than the external deficit, while the private domestic sector is spending more than they are earning.","ID":"2516","explanation":"","answers":[{"ID":"12530","answer":"False","correct":"0"},{"ID":"12529","answer":"True ","correct":"1"}]},{"question":"2. The automatic stabilisers built into national government fiscal policy always operate in a counter-cyclical manner.","ID":"2517","explanation":"","answers":[{"ID":"12532","answer":"False","correct":"0"},{"ID":"12531","answer":"True","correct":"1"}]},{"question":"3. Sovereign government spending becomes more costly when the bond markets push yields on new public bond issues up.","ID":"2518","explanation":"","answers":[{"ID":"12534","answer":"False","correct":"1"},{"ID":"12533","answer":"True","correct":"0"}]}]}, {"ID":"699","name":"Quiz 2022 - 32","added_on":"2022-09-01 07:30:22","questions":[{"question":"1. Assuming the expenditure multiplier is greater than 1, if the government increases its deficit they will have a greatest impact on aggregate demand if there are no offsetting monetary operations by the central bank (government bond sales) draining the excess reserves created.","ID":"2519","explanation":"","answers":[{"ID":"12542","answer":"False","correct":"1"},{"ID":"12541","answer":"True","correct":"0"}]},{"question":"2. If the government achieves in reducing its fiscal deficit by say $10 billion, the net financial assets destroyed by this withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"2520","explanation":"","answers":[{"ID":"12544","answer":"False","correct":"1"},{"ID":"12543","answer":"True","correct":"0"}]},{"question":"3. . Which government deficit outcome is the most expansionary?nnnn","ID":"2521","explanation":"","answers":[{"ID":"12545","answer":"Structural deficit of 1 per cent of GDP.","correct":"0"},{"ID":"12546","answer":"Overall deficit of 1 per cent of GDP.","correct":"0"},{"ID":"12547","answer":"Overall deficit of 2 per cent of GDP.","correct":"1"}]}]}, {"ID":"700","name":"Quiz 2022 - 33","added_on":"2022-09-08 22:41:41","questions":[{"question":"1. A nation can run an external deficit and a government surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.","ID":"2522","explanation":"","answers":[{"ID":"12555","answer":"False","correct":"1"},{"ID":"12554","answer":"True","correct":"0"}]},{"question":"2. For workers to regain a larger share of national income, nominal wages have to grow faster than inflation - that is, the real wage has to rise.","ID":"2523","explanation":"","answers":[{"ID":"12557","answer":"False","correct":"1"},{"ID":"12556","answer":"True","correct":"0"}]},{"question":"3. Say, we form the view that over the next year: (a) the average working week will be constant in hours; (b) real GDP growth rate will be 3 per cent; (c) output per unit of labour input (persons) will grow at 1.5 per cent; and (d) the labour force will maintain a growth rate of 1.5 per cent per annum. We would project that the unemployment rate:","ID":"2524","explanation":"","answers":[{"ID":"12558","answer":"Will rise in the coming year by 1.5 per cent.","correct":"0"},{"ID":"12559","answer":"Will fall in the coming year by 1.5 per cent.","correct":"0"},{"ID":"12560","answer":"Will be unchanged.","correct":"1"}]}]}, {"ID":"701","name":"Quiz 2022 - 34","added_on":"2022-09-16 00:19:20","questions":[{"question":"1. If workers desire real wage gains then they must maintain nominal wages growth equal to the growth in labour productivity.","ID":"2525","explanation":"","answers":[{"ID":"12568","answer":"False","correct":"1"},{"ID":"12567","answer":"True","correct":"0"}]},{"question":"2. Assume the central bank keeps the inflation rate steady and equal to the nominal interest rate. Under these monetary conditions, a government can push the primary fiscal balance into surplus and drive down the public debt ratio even if the fiscal austerity causes a recession.","ID":"2526","explanation":"","answers":[{"ID":"12576","answer":"False","correct":"0"},{"ID":"12575","answer":"True","correct":"1"}]},{"question":"3. Suppose a government announced it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year and during that year net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. If private domestic sector deleveraging resulted in it spending less than it earned to the measure of 5 per cent of GDP, then the fiscal austerity plans will undermine growth even if the net export surplus was realised.","ID":"2527","explanation":"","answers":[{"ID":"12578","answer":"False","correct":"0"},{"ID":"12577","answer":"True","correct":"1"}]}]}, {"ID":"702","name":"Quiz 2022 - 35","added_on":"2022-09-22 22:12:58","questions":[{"question":"1. Only one of the following propositions is possible for a nation with an external deficit over any given period (with all balances expressed as a per cent of GDP):nnnA public surplus of equal size to the external deficit, with the private domestic sector dis-saving overall.nA public surplus larger than the external deficit, with the private domestic sector saving overalln","ID":"2528","explanation":"","answers":[{"ID":"12579","answer":"A public surplus of equal size to the external deficit, with the private domestic sector saving overall.","correct":"0"},{"ID":"12580","answer":"A public surplus of equal size to the external deficit, with the private domestic sector dis-saving overall.","correct":"1"},{"ID":"12581","answer":"A public surplus larger than the external deficit, with the private domestic sector saving overall","correct":"0"}]},{"question":"2. If in attempting to estimate the cyclical component of a government fiscal outcome we underestimate the potential capacity of an economy, we will conclude that the government"s discretionary fiscal position is less expansionary than it actually is.","ID":"2529","explanation":"","answers":[{"ID":"12582","answer":"True","correct":"0"},{"ID":"12583","answer":"False","correct":"1"}]},{"question":"3. Governments concerned with their public debt ratio should encourage growth because the debt ratio always falls once economic growth resumes.","ID":"2530","explanation":"","answers":[{"ID":"12584","answer":"True","correct":"0"},{"ID":"12585","answer":"False","correct":"1"}]}]}, {"ID":"703","name":"Quiz 2022 - 36","added_on":"2022-09-29 22:42:45","questions":[{"question":"1. Assuming the expenditure multiplier is greater than 1, if the government increases its deficit they will have a greatest immediate impact on aggregate demand if there are no offsetting monetary operations by the central bank (government bond sales) draining the excess reserves created.","ID":"2531","explanation":"","answers":[{"ID":"12586","answer":"True","correct":"0"},{"ID":"12587","answer":"False","correct":"1"}]},{"question":"2. If the government achieves in reducing its fiscal deficit by say $10 billion, the net financial assets destroyed by this withdrawal could be replaced by the central bank engaging in a $10 billion quantitative easing program.","ID":"2532","explanation":"","answers":[{"ID":"12588","answer":"True","correct":"0"},{"ID":"12589","answer":"False","correct":"1"}]},{"question":"3. Which government deficit outcome is the most expansionary?","ID":"2533","explanation":"","answers":[{"ID":"12590","answer":"1 per cent of GDP.","correct":"0"},{"ID":"12591","answer":"2 per cent of GDP.","correct":"0"},{"ID":"12592","answer":"3 per cent of GDP.","correct":"1"},{"ID":"12593","answer":"Cannot tell because it depends on the decomposition of the structural and cyclical components.","correct":"0"}]}]}, {"ID":"704","name":"Quiz 2022 - 37","added_on":"2022-10-06 22:58:08","questions":[{"question":"1. A government can always eliminate unemployment by hiring workers to digs holes and fill them in again each day. But this option will not have the same impact on current economic growth ($-for-$) as a private investment plan which constructs a new factory.","ID":"2534","explanation":"","answers":[{"ID":"12594","answer":"True","correct":"0"},{"ID":"12595","answer":" False","correct":"1"}]},{"question":"2. Economists note that the automatic stabilisers increase fiscal deficits (or reduce fiscal surpluses) in times of slack aggregate demand. This sensitivity of the fiscal outcome to the economic cycle could be eliminated if the government followed a fiscal rule such that it had to balance its spending and taxation revenue at all times.","ID":"2535","explanation":"","answers":[{"ID":"12596","answer":"True","correct":"0"},{"ID":"12597","answer":"False","correct":"1"}]},{"question":"3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.","ID":"2536","explanation":"","answers":[{"ID":"12598","answer":"True","correct":"1"},{"ID":"12599","answer":"False","correct":"0"}]}]}, {"ID":"705","name":"Quiz 2022 - 38","added_on":"2022-10-13 02:39:41","questions":[{"question":"1. Which of the following would add to GDP in any on period?nn(a) The purchase of some strawberries from the supermarket.n(b) The payment by the national government for public servants in the tax department.n(c) The payment by the national government to an aged pension recipient.n(d) The purchase of an old model car from a car dealer.n(e) The purchase of some house paint by an owner occupier as part of a refurbishment project.n(f) The purchase of some house paint by a professional painting tradesperson as part of a refurbishment project.n(g) The sale of some military equipment to another country.n(h) The purchase of some shares in an airline company.n","ID":"2537","explanation":"","answers":[{"ID":"12600","answer":"a, b, c, d","correct":"0"},{"ID":"12601","answer":"a, b, c, f, g","correct":"0"},{"ID":"12602","answer":"a, b, c, e, g","correct":"0"},{"ID":"12603","answer":"a, b, e, g","correct":"1"}]}]}, {"ID":"706","name":"Quiz 2022 - 39","added_on":"2022-11-10 20:29:07","questions":[{"question":"1. If the government increases its fiscal deficit as a percentage of GDP it will squeeze the real resources available for private productive uses.","ID":"2538","explanation":"","answers":[{"ID":"12604","answer":"True","correct":"1"},{"ID":"12605","answer":"False","correct":"0"}]},{"question":"2. For a nation running a current account deficit, national income adjustments will ensure government"s fiscal position is in deficit no matter what the government"s intentions are if the private domestic sector is spending less than its income.","ID":"2539","explanation":"","answers":[{"ID":"12606","answer":"True","correct":"1"},{"ID":"12607","answer":"False","correct":"0"}]},{"question":"3. Specific legal considerations aside, it would be impossible for a government to avoid issuing debt to the private sector when running a fiscal deficit while the central bank was targeting a positive short-term policy rate.","ID":"2540","explanation":"","answers":[{"ID":"12608","answer":"True","correct":"0"},{"ID":"12609","answer":"False","correct":"1"}]}]}, {"ID":"709","name":"Quiz 2022 - 41","added_on":"2022-11-23 05:13:56","questions":[{"question":"1. The distinction between structural and the cyclical components of the final government balance helps us to determine the direction of the discretionary fiscal policy stance of the government. In that context, which of the following situations represents the more expansionary outcome:","ID":"2544","explanation":"","answers":[{"ID":"12629","answer":"You cannot tell because you do not know the decomposition between the cyclical and structural components.","correct":"0"},{"ID":"12627","answer":"A government deficit equivalent to 5 per cent of GDP","correct":"1"},{"ID":"12628","answer":"A government deficit equivalent to 3 per cent of GDP","correct":"0"}]},{"question":"2. If private domestic investment is greater than private domestic saving and the current account is in deficit then the government balance has to be in deficit at all levels of GDP.","ID":"2545","explanation":"","answers":[{"ID":"12635","answer":"False","correct":"1"},{"ID":"12634","answer":"True","correct":"0"}]},{"question":"3. If a central bank uses \\\"overt monetary financing\\\" (OMF) to support the net public spending, it would still require debt issuance if they wanted to target a non-zero policy interest rate.","ID":"2546","explanation":"","answers":[{"ID":"12633","answer":"False","correct":"1"},{"ID":"12632","answer":"True","correct":"0"}]}]}, {"ID":"708","name":"Quiz 2022 - 40","added_on":"2022-11-17 01:03:11","questions":[{"question":"1. A currency-issuing government does not control the final fiscal outcome in any period.","ID":"2541","explanation":"","answers":[{"ID":"12610","answer":"True","correct":"1"},{"ID":"12611","answer":"False","correct":"0"}]},{"question":"2. If employment growth matches the pace of growth in the working age population (people above 15 years of age) then the economy will experience a constant unemployment rate as long as participation rates do not change.","ID":"2542","explanation":"","answers":[{"ID":"12612","answer":"True","correct":"1"},{"ID":"12613","answer":"False","correct":"0"}]},{"question":"3. n a fiat monetary system (for example, US or Australia) with an on-going external deficit and fiscal deficit that is smaller than the external sector, then the domestic private sector is in:","ID":"2543","explanation":"","answers":[{"ID":"12614","answer":"Cannot tell without knowing the actual deficits as a percent of GDP.","correct":"0"},{"ID":"12615","answer":"Surplus","correct":"0"},{"ID":"12616","answer":"Deficit","correct":"1"}]}]}, {"ID":"710","name":"Quiz 2022 - 42","added_on":"2022-12-01 05:21:48","questions":[{"question":"1. A public works program that digs holes and fills them in again has exactly the same impact on current economic growth ($-for-$) as a private investment plan which constructs a new factory.","ID":"2547","explanation":"","answers":[{"ID":"12636","answer":"True","correct":"1"},{"ID":"12637","answer":"False","correct":"0"}]},{"question":"2. The automatic stabilisers increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the fiscal outcome to the economic cycle could be eliminated if the government followed a fiscal rule such that it had to balance its fiscal position at all times.","ID":"2548","explanation":"","answers":[{"ID":"12638","answer":"True","correct":"0"},{"ID":"12639","answer":"False","correct":"1"}]},{"question":"3. It is clear that the central bank can use balance sheet management techniques to control yields on public debt at certain targetted maturities. However, this capacity to control the term structure of interest rates is diminished during periods of high inflation.","ID":"2549","explanation":"","answers":[{"ID":"12640","answer":"True","correct":"1"},{"ID":"12641","answer":"False","correct":"0"}]}]}, {"ID":"711","name":"Quiz 2022 - 43","added_on":"2022-12-08 21:30:18","questions":[{"question":"1. Governments concerned with their public debt ratio should encourage growth because the debt ratio falls once economic growth resumes.","ID":"2550","explanation":"","answers":[{"ID":"12642","answer":"True","correct":"0"},{"ID":"12643","answer":"False","correct":"1"}]},{"question":"2. A nation can run a current account deficit accompanied by a government sector surplus of equal proportion to GDP, while the private domestic sector is spending more than they it is earning.","ID":"2551","explanation":"","answers":[{"ID":"12649","answer":"False","correct":"0"},{"ID":"12648","answer":"True","correct":"1"}]},{"question":"3. Government deficit spending would have a greater immediate expansionary impact on aggregate spending if the central bank bought the public debt to match the deficit instead of a situation where the government matches it deficit by issuing debt to the private sector.","ID":"2552","explanation":"","answers":[{"ID":"12646","answer":"True","correct":"0"},{"ID":"12647","answer":"False","correct":"1"}]}]}, {"ID":"712","name":"Quiz 2022 - 44","added_on":"2022-12-15 17:10:01","questions":[{"question":"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.","ID":"2553","explanation":"","answers":[{"ID":"12657","answer":"False","correct":"1"},{"ID":"12656","answer":"True","correct":"0"}]},{"question":"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.","ID":"2554","explanation":"","answers":[{"ID":"12659","answer":"False","correct":"1"},{"ID":"12658","answer":"True","correct":"0"}]},{"question":"3. If the household saving ratio rises and there is an external deficit then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.","ID":"2555","explanation":"","answers":[{"ID":"12663","answer":"False","correct":"1"},{"ID":"12662","answer":"True","correct":"0"}]}]}, {"ID":"713","name":"Quiz 2022 - 45","added_on":"2022-12-22 20:25:18","questions":[{"question":"1. Widening the tax base provides the government with more capacity to spend.","ID":"2556","explanation":"","answers":[{"ID":"12679","answer":"False","correct":"0"},{"ID":"12678","answer":"True","correct":"1"}]},{"question":"2. If there is an external deficit, and the private domestic sector successfully increases its overall saving as a percentage of GDP, then income adjustments will always ensure the government fiscal balance is in deficit.","ID":"2557","explanation":"","answers":[{"ID":"12675","answer":"False","correct":"0"},{"ID":"12674","answer":"True","correct":"1"}]},{"question":"3. Estimates of structural fiscal deficits published the multilateral agencies such as the IMF and the OECD are to be treated with suspicion because they are based on excessively optimistic estimates of potential GDP.","ID":"2558","explanation":"","answers":[{"ID":"12677","answer":"False","correct":"1"},{"ID":"12676","answer":"True","correct":"0"}]},{"question":"4. Special Xmas Question: Santa is having trouble keeping his sled and related delivery infrastructure in working order. But:","ID":"2559","explanation":"","answers":[{"ID":"12670","answer":"He know he runs a household and will have to save, earn more or borrow to generate the funds necessary for maintenance.","correct":"1"},{"ID":"12671","answer":"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.","correct":"0"}]}]}, {"ID":"714","name":"Quiz 2022 - 46","added_on":"2022-12-29 22:13:10","questions":[{"question":"1. Excessive real wages growth can trigger mass unemployment.","ID":"2560","explanation":"","answers":[{"ID":"12687","answer":"False","correct":"0"},{"ID":"12686","answer":"True","correct":"1"}]},{"question":"2. A government desires to reduce the unemployment rate over the next year and gears its macroeconomic policy to maintaining trend real GDP growth, which is 3.5 per cent per annum. If we know that labour productivity is growing at 2 per cent per annum, the labour force is growing at 1.5 per cent per annum, and the average working week is constant in hours, the government will succeed in its aim if real GDP is sustained at the trend.","ID":"2561","explanation":"","answers":[{"ID":"12689","answer":"False","correct":"1"},{"ID":"12688","answer":"True","correct":"0"}]},{"question":"3. If a sovereign national government runs a balanced fiscal position over the economic cycle (peak to peak), it must accept, that after all the spending adjustments are exhausted, that the private domestic balance will only be in surplus if the external balance is in surplus.","ID":"2562","explanation":"","answers":[{"ID":"12691","answer":"False","correct":"0"},{"ID":"12690","answer":"True","correct":"1"}]}]}]