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Saturday Quiz – April 16, 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. A declining budget deficit tells us that the government is pursuing a more contractionary fiscal policy stance.




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.



3. Imposing some positive minimum reserve requirements for private banks provides some constraint on their credit creation activities.




4. Real government spending can be higher if they raise more tax revenue.




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.






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    This Post Has One Comment
    1. “Imposing some positive minimum reserve requirements for private banks provides some constraint on their credit creation activities.” couldn’t you argue that reserve requirements reduces a little interest income, leaving less money to accrue to retained earnings/capital reserves and thus may prevent some loans from being made?

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