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Saturday Quiz – October 22, 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 questions. Your results are only known to you and no records are retained.

1. A sovereign national government has to tax in order to spend

2. A budget surplus indicates that the national government is seeking to slow down aggregate demand.

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.

4. To redistribute national income back to workers, nominal wages have to grow faster than inflation.

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:

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    This Post Has 9 Comments
    1. Splutter! I answered False to Q1 but the quiz claimed I answered True! I’m giving myself 5 out of 5…Not exactly sure why I got the last Q right but I’ll take the glory anway.

    2. So where’s the de-breifers? (Miami Florida) are government fees taxes? Words are always a problem.

      #1. If gov’t charges for use airwaves, mineral rights, or tariffs are taxes needed?

      #3 What’s the difference between external sector and private domestic sector?

      #4 i was wrong.

    3. usually I only get a couple right. I bombed today 0 for 5. I thought the first two were no brainers and I still got them wrong. Does MMT now reccomend budget surpluses while funding spending with tax revenue! Is this the twilight zone? LOL.

    4. Yep, I’m a wee bit confused about the first question as well – no doubt, the devil, as ever with Bill’s wording of the questions, is in the detail.

    5. well, I guess he could be saying that if the government never taxed, the currency would have no value. I also thought that moves to surplus were to cool off the economy. Not always the intention, but, is’nt that the result?

    6. I always thought taxation was supposed to occur after accounts are credited, but there you go.

      I think the point about moving to a surplus, is that, per MMT, governments can no more ‘pursue surpluses’ than I can make traffic lights turn green.

      Anyway, I shall stop commenting now, in case I display any more of my ignorance! I’ll wait for tomorrow’s explanations..

    7. I am not disputing the fact that taxation occurs after accounts have been credited. I was just trying to say that people would not accept the currency if they didn’t have a tax liability to fulfill in said currency. I would think that governments could pursue surpluses if they so wished, although, this would run down assets. This kind of dialog between us lamens is the sort of thing that turns ignorance into wisdom!

    8. I’m going to say number five is unchanged. If output grew at 3 and the labor force grew by 3 that would be 0 productivity. if output grows 3 and labor only grew by half, by definition, your productivity must have went up by the difference. I am no economist but thats the way I’m figuring it. What yall think?

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