Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern…
Saturday Quiz – July 2, 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.
Quiz #119
- 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.
- False
- True
- 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.
- False
- True
- 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.
- False
- True
- 4. A continuous budget deficit leads to public spending building up and an increase in the inflation risk faced by the economy.
- False
- True
- 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.
- False
- True
Sorry, quiz 119 is now closed.
You can find the answers and discussion here
Q3, does “increase interest rates” really mean increase the fed funds rate?
Dear Fed Up
It does although the Fed Funds rate is country-specific. It means the target policy rate set by the central bank wherever.
best wishes
bill
Got it. Thanks bill!
My first bloody maximum. It must be about a year.
I am a very happy pommy
Congrats Andy! Me too, haha… Although this one is probably partly a fluke. Though i’ve been left-leaning and never accepted the economic debate as it has been throughout my (rather short) life, i mostly fail on some questions. Not because i’ve bought into neoliberalism or any mainstream propaganda, but rather because i sometimes do not know the answer and find arguments for both. Gotta love how Bill explains the answers afterwards, though. It’s a great way to learn!
Thanks Bill! 🙂