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Saturday Quiz – April 12, 2014

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. Ignoring political reality, the central bank in a currency-issuing nation could still increase interest rates even if the government instructed it to directly purchase treasury debt to facilitate the national government’s fiscal deficit.

2. If a nation is earning less than it is spending with respect to its transactions with the rest of the world and household saving suddenly increases as a proportion of disposable income, then the government could still run its current surplus without a decline in output and income occurring.

3. A continuous fiscal deficit leads to public spending building up and an increase in the inflation risk faced by the economy.

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