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Saturday Quiz – November 14, 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. The central bank sets the short-run interest rate, and its associated liquidity management functions puts a limit of the rate it can pay on excess reserves held by the commercial banks.

2. Aggregate demand is the sum of all spending components (consumption, investment, government spending, and net exports). In a stock-flow consistent macroeconomics, we know that flows during a period add to relevant stocks. For example, if the flow of consumption spending rose by $200 billion in total in any one year, then if nothing else changes the stock of aggregate demand would rise by the same amount in the first instance (before the multiplier starts to work).

3. If the nation is running a current account deficit of 2 per cent of GDP and the government runs a surplus equal to 2 per cent of GDP, then we know that at the current level of GDP, the private domestic sector is not saving overall.

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    This Post Has 3 Comments
    1. Ugh. Tough quiz. I am sure I would have got #1 right if I could have only understood the question. Figured I had a 50% chance on #2. That was wrong. Looking forward to the answers and explanation as always. Thanks.

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