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The Weekend Quiz – January 28-29, 2017

Welcome to The Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.

1. If the inflation rate is steady and the central bank maintains a constant nominal interest rate, then under current institutional arrangements where governments match deficit spending with debt issuance to the private sector, the public debt ratio may fall even if the government deficit doubles (say, from 2 to 4 per cent of GDP).

2. The neo-liberal era has been characterised by a declining wage share in national income in many nations. This means that the real living standards of workers have been systematically eroded in these nations.

3. Suppose that the government announced as part of a fiscal austerity strategy that it intended to cut its deficit from 4 per cent of GDP to 2 per cent in the coming year while net exports were projected to move from a deficit of 1 per cent of GDP to a surplus of 1 per cent of GDP. In that situation we would not be able to conclude that the fiscal austerity plans would undermine growth if the net export projection was realised.

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    This Post Has 3 Comments
    1. I haven’t looked at the answers yet, but I got 2 correct, even though I thought Bill might have got something wrong.

      Over to the answers, because getting 3/3 is only worth something if I know why.

    2. You need to be very careful about what Bill asks. Typically, there is just something missing in the statement, which will make you opt for the wrong answer, unless you spot it. It takes a lot of practice, but it is very good training for arguing with people in “verbal” arguments. Typically, the neo-liberals depend on just this kind of misdirection. If you can spot it, you can win the (logical) argument, or point out their dissembling. Not sure it ever helps but it’s good to keep trying.

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