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Saturday Quiz – March 5, 2011

Welcome to the billy blog Saturday quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following six questions. Your results are only known to you and no records are retained.

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.

2. A basic understanding of Modern Monetary Theory (MMT) would leave you to conclude that excessive real wage demands by workers can cause unemployment.

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:

4. A budget surplus indicates that the national government is

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.

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    This Post Has 3 Comments
    1. Senexx, I’ve found the easiest way to deal with questions like number 1 is this:

      trade deficit = gov’t deficit plus private deficit

      This way all deficits are negative numbers and all surpluses are positive numbers.

      For question 1, throw in a positive number.

      20 = 0 + X

      20 = 0 + 20

    2. How about a different view of question #2.

      Can excessive real “business profit” demands by businesses cause a recession?

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