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Saturday Quiz – December 28, 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. If the external sector was running a surplus equivalent to 4 per cent of GDP, and the sum of all the private sector spending plans indicated it was desiring to run a surplus overall equivalent to 6 per cent, then the government could safely plan on achieving a budget surplus of 2 per cent of GDP.



2. If governments allowed the automatic stabilisers built into the government balance to work counter-cyclically and avoided discretionary shifts in fiscal policy, the fiscal balance would return to its appropriate level after a cyclical disturbance.



3. If austerity led to all national governments simultaneously running public surpluses (which is the aim) then it would be impossible for all their respective private domestic sectors to save overall.





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    This Post Has 4 Comments
    1. Could you explain the correct answers? I didn’t even understand the questions in 1 & 2 so I just clicked an answer to read & learn from the results. I am trying to learn and understand MMT. Thanks.

    2. Bill will post a follow up blog tomorrow where he elaborates in detail on the correct answers to the questions – this usually also includes the presentation of some background material which you will probably find helpful.

    3. Got the 2nd one wrong, falsely assuming that stabilizing efforts of the government would magically work. But hey, sometimes someone may dream a little, right?

    4. I guessed false on 2) based on the wording “appropriate level” of fiscal balance. The question does not define “appropriate” so it is inherently imprecise. The MMT position on public deficits is that they are not necessarily good or bad, and we have to examine other benchmarks such as unemployment or inflation to reach a sensible policy decision.

      But perhaps it was just a good guess. Bill is known for subtle nuances in his trivia questions so it is all too easy to read them wrong.

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