Saturday Quiz – April 7, 2012

Welcome to the Special Holiday – 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.

Quiz #159

  • 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.
    • False
    • True
  • 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.
    • False
    • True
  • 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.
    • False
    • True
  • 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.
    • False
    • True
  • 5. Premium Question: Unemployment can still rise when employment growth keeps pace with labour force growth.
    • False
    • True
  • 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.
    • Do not choose this option
    • True

Sorry, quiz 159 is now closed.

You can find the answers and discussion here

This Post Has 4 Comments

  1. Brian,
    This guy seems to be talking about QE and its effect on stock prices, and saying that stocks prices only increase with the expected flow of QE not the stock of QE.

    We don’t have sufficient time to go into the nuances of what this revolutionary run-on sentence means on this good Friday, suffice to say that it makes virtually all the literature on modern monetary theory (in practice of course, the theoretical part is such gibberish that only fans of MMT and Neo-Keynesianism care about it – something nobody actually in the market gives a rat’s ass about) obsolete.

    As far as I know MMT doesn’t claim any particular affects on stocks, or that QE itself is a stimulus. Only that QE might be used to bring down the yield on government debt by ensuring there is sufficient demand for it. MMT prefers to simply not issue debt to match the deficit $-for$ in the first place, and that the primary tool for boosting the economy generally (and presumably stocks too) is fiscal policy.

  2. Thanks for responding, CharlesJ. I still do not understand the selected quote you inserted, but I do think that it is most probably based, like virtually all criticism of MMT that I have found, on a misunderstanding of MMT.

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