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The Weekend Quiz – April 30-31, 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. The National Accounts tell us that total spending is the sum of household consumption, private investment, government spending and net exports. To understand this in terms of a stock-flow consistent macroeconomics, where we have to always trace the impact of flows during a period on the relevant stocks at the end of the period, we would interpret the spending components as flows that add to the stock of aggregate demand (spending) which in turn impacts on the final production (Gross Domestic Product) and national income.

2. Imposing some positive minimum reserve requirements constrains the credit creation activities of the private banks relative to a situation where no requirements were set other than the rule that reserve balances could not be negative.

3. Adopting internal devaluation (reducing wages and prices) for nations that cannot adjust their exchange rate (for example, Greece), while harsh, ultimately improves the nation's international competitiveness.

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    This Post Has 4 Comments
    1. 2 out of 3 again. Looking forward to learning more on the stock-flow part.
      The MMT book is also truly excellent. Thanks Bill!

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