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Saturday Quiz – January 24, 2015

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. Assume a nation is running an external surplus equivalent to 2 per cent of GDP and the government manages to run a fiscal surplus equivalent to 1 per cent of GDP. The national income changes associated with these balances would ensure that the private domestic sector was running an overall deficit of 1 per cent of GDP.

2. Starting from the external situation in Question 1, with the surplus being the equivalent of 2 per cent of GDP but this time the fiscal surplus is currently 2 per cent of GDP. If the fiscal balance stays constant and the external surplus rises to the equivalent of 4 per cent of GDP then you can conclude that national income also rises and the private surplus moves from minus 2 per cent of GDP to plus 2 per cent of GDP.

3. Even a sovereign, currency-issuing government has to receive tax dollars from the non-government at times in order to to spend effectively.

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