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Saturday Quiz – December 19, 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 that a nation is continuously running an external deficit of 2 per cent of GDP. In this economy, if the private domestic sector successfully saves overall, we would find:

2. Given that government bonds constitute a component of non-government sector wealth, that sector's net worth rises if the government issues bonds to match its deficit spending.

3. While fiscal deficits rise due to the operation of the automatic stabilisers, these effects work in a counter-cyclical fashion to ensure that the government fiscal balance returns to its appropriate level once growth resumes.

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