Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern…
Saturday Quiz – October 31, 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.
Quiz #345
- 1. A nation can run an external deficit accompanied by a government sector surplus (of equal proportion to GDP as the external deficit) as long as the private domestic sector is spending less than they are earning.
- False
- True
- 2. To ensure that the financial system is stable, the central bank allows the money supply to be driven by the monetary base.
- False
- True
- 3. Sovereign government spending becomes more costly when the bond markets push up yields on new bond issues.
- False
- True
Sorry, quiz 345 is now closed.
You can find the answers and discussion here
To fund a gov’t surplus and a trade deficit people have to spend more than they earn, which means borrowing.
Today’s money supply is driven by commercial bank lending.
If a gov’t is monetarily sovereign it doesn’t need to borrow to fund its spending.