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Saturday Quiz – September 26, 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. If the government abandons the practice of issuing bonds to the non-government sector to match its fiscal deficit, the latter will be less wealthy but have more cash.



2. When a country runs a small current account deficit and the private domestic sector is saving overall, the government fiscal balance will always be in deficit.



3. The British Labour Party under its new leadership is still wedded to eliminating the fiscal deficit. However, it has stated it prefers tax increases rather than spending cuts whereas so-called "conservatives" recommend spending cuts and privatisation. In terms of the initial impact on national income, which policy option will be more damaging - a tax increase which aims to increase tax revenue at the current level of national income by $x or a spending cut of $x?







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    This Post Has 2 Comments
    1. Question 1
      If the Govt does not issue bonds then the non Govt sector will hold more cash. But as they will not receive interest on these bonds the NGS would also be less wealthy. So why not true

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