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The Weekend Quiz – March 24-25, 2018

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. One interpretation of the sectoral balances decomposition of the national accounts, is that it is impossible for all governments (in all nations) to run public surpluses without impairing growth because it is likely that the private domestic sector in some countries will desire to save overall.



2. A rising government deficit will always allow the private domestic sector to increase its saving in nominal terms.



3. A rising government deficit indicates an expansionary shift in policy and the challenge is to calibrate that expansion to ensure nominal demand growth does not exceed the real capacity of the economy to respond by increasing real output.





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    This Post Has 5 Comments
    1. Lance says:
      Friday, March 23, 2018 at 17:19
      2 out of three! Got no 1 wrong. Back to earth with a thump!

       

      Ditto. We must have been thinking (incorrectly) alike.

    2. 1/3 too.

      I guess for number 1 a rising deficit could mean the autostabilisers are kicking in, not a deliberate “expansionary shift in policy”, so the economy is most likely nowhere near reaching full capacity?

      For number 1, is it that if ALL governments ran the same level of surplus in ALL countries but only SOME countries had private sectors that wanted to save, then only SOME countries would necessarily have trade surpluses which could be accommodated by other countries having trade deficits where their private domestic sector didn’t want to save?

      Why am I so dumb despite all my MMT study????? Failure of logical reasoning maybe. ;-)

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