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The Weekend Quiz – July 8-9, 2017

Welcome to The Weekend 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. In terms of the initial impact on national income, a tax increase which aims to increase tax revenue at the current level of national income by $x is less damaging than a spending cut of $x?

2. If private households increase their saving from disposable income and firms reduce their investment expenditure, then the government has to expand its fiscal deficit to avoid employment losses.

3. During a recession, a government has to use expansionary fiscal policy to restore trend real GDP growth if it wants to reduce unemployment.

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    This Post Has 2 Comments
    1. Question one.
      and this is why I don’t like multiple choice. I tend to overthink the things. It was easy to tick true, but here is a question. What if it was not an income tax but a large import duty (10 per cent across the board) in a “high importing”(including intermediate goods) country. Considering the inflationary and unemployment outcome, how fast then the impact on income compared to gov. spending cuts?

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