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The Weekend Quiz – April 9-12, 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. Assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy settings. Then, if government spending increases by $X dollars and private investment and exports are unchanged, we know, as a result of our understanding of the expenditure multiplier, that nominal GDP will grow until the sum of taxation revenue, import spending and household saving rises by exactly $X dollars.

2. When a currency-issuing government voluntarily constrains itself to borrow from the non-government sector to cover its fiscal deficit, it substitutes its spending for the borrowed funds and reduces the private capacity to borrow and spend.

3. The crucial difference between a monetary system based on the convertible currency backed by gold and a fiat currency monetary is:

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    This Post Has 7 Comments
    1. hi bill,
      Just dropping in to leave a note that i really appreciate you contributing to heiner flassbeck’s coming makroskop online mag. i’ve been always undecided whether to get a abo of his old site but the chance to spread some of your articles to germans in their own language made me a contributor there.
      much appreciated

    2. It may interest some of you that Argentina has gone back to borrowing in a foreign currency. The government of newly elected President Macri plans to raise 12.5 billion dollars by selling bonds denominated in US dollars.

    3. Dear viosz (at 2016/04/08 at 18:31)

      Thanks for your nice comments. I am very happy to be collaborating with Heiner and his team. We have also started discussions on broader collaborations in the educational space.

      But readers should also be aware that my involvement in Makroscop is under specific terms. They are going to provide a subscription-based service which will restrict who can read the material. I object to that philosophically and have negotiated a special arrangement with them whereby my articles will always be open source – that is, open to all to read irrespective of whether one has subscribed or not. I prefer information to be free so we do not create a class system of those who cannot afford to access information and be educated and those who can afford data.

      best wishes

    4. hi bill,
      to follow up on your response (thanks for taking the time), most of heiner flassbeck’s articles were always free to read for some time before they got paywalled. this will also apply to the new mag.
      your attitude honours you (must say i expected no different), but it would take too long for this comment to elaborate on the downfall of progressive and free online journalism in germany.

    5. James that’s how it works.

      Fund a neoliberal puppet to win an election get them to borrow in $ and then let the hedge funds and the IMF do the rest. Then share out the spoils of this new financial war.

      President makes a visit and says thank you for selling us all your public assets on the cheap.

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