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Saturday Quiz – May 11, 2013

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. The crucial difference between a monetary system based on the convertible currency (gold standard) model and a fiat currency monetary is that under the former system:

1. Bank reserves are maintained to ensure that all the cheques written every day clear when presented. If a bank doesn't have enough reserves then cheques drawn against it will bounce.

3. Assume inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting. Iff government spending increases by $X dollars and private investment and exports are unchanged then nominal income will continue growing until the sum of the changes in taxation revenue, import spending and household saving equals $X dollars.

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    This Post Has One Comment
    1. I know Bill is very busy and writes a heck of a lot but I would like to see him interact and reply more to posts. Perhaps he could assign a trusted student or research assistant to some of this work if he is fortunate enough to have such a person paid for in his institutional budget. People post with questions, quibbles, disagreements, misunderstandings, requests for enlightenment and so on. It would be good to see more elaboration and debate on these issues.

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