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The Weekend Quiz – February 6-7, 2016

Welcome to The Weekend Quiz, which used to be known as the 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 a nation records an external balance (net exports equal zero) and the government runs a balanced fiscal position then we know that private domestic sector spending will be equal to its overall income and household saving will be zero.

2. The standard of living of workers falls if growth in real wages fails to keep pace with labour productivity growth.

3. Rising private domestic saving overall signals the need for an expanding public deficit to avoid employment losses.

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    This Post Has One Comment
    1. Hi Bill,
      I apologize as I realize I am a newbie to a lot of this stuff, but have been researching this concept of monetary theory, which has made a lot of sense so far, but it has raised a couple of simple questions for me.

      Is it true that effectively, only a monetary sovereign is able to settle debts fully?

      I know this might appear a stupid question, and the answer may not even matter to most people, but from what I have gathered so far, a monetary sovereign is the only entity which can ‘issue’ money, and that money (correct me if I am wrong) comes at ‘some cost’ to society.

      So while we monetary non-sovereigns are discharging our personal and private debts between each other with this ‘money’ issued by the monetary sovereign, how is it that we are settling the debt (cost) created by the issuance of that money to begin with? As monetary non-sovereigns do we actually have the ability to do so, or is the only entity which can effectively settle the cost of issuing the money be the entity which issued it?

      I have also found several resources that quote that Australia only employed its monetary sovereignty for 11 or 12 years, from 1911 to 1923 or thereabouts, where the money issued did not come at a cost to society (or was minimal in comparison to other sources). I am wondering if this is true?


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