The Weekend Quiz – April 7-8, 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. The private domestic sector can save overall even if the government fiscal balance is in surplus as long as net exports are positive.

2. The only difference between quantitative easing and a discretionary fiscal injection is which branch of government is responsible for the stimulus.

3. While continuous national governments deficits are possible if the non-government sector desires to save, they do imply continuously rising public debt levels as a percentage of GDP.

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    6 Responses to The Weekend Quiz – April 7-8, 2018

    1. Lance says:

      2 out of 3. Got question 1wrong.

    2. Nigel Hargreaves says:

      3 out of 3. For a change if I’m honest.

    3. Mike Ellwood says:

      Lance says:
      Friday, April 6, 2018 at 17:37
      2 out of 3. Got question 1 wrong.

      Same here. :-)

    4. cs says:

      Question 1 wrong too…. I hesitated for a moment thinking “maybe net exports isn’t enough to define a current account surplus” but then I thought nah, “net exports” must be shorthand for :foreign sector surplus.: But there is more to the foreign sector balance than just exports isn’t there? Overseas investment income etc.

      hmmmmmm….. devil is in the detail.

    5. Grumpy Friday says:

      I don’t like question three! More fair to replace “imply” with “necessitate.”

    6. Alan Longbon says:

      Grumpy Friday,

      A government does not have to issue debt at all, it is a voluntary government budget constraint that causes massive misallocation of money.


      That is correct net exports could be washed out by capital flows and the current account catches both and is the word to look for.

      The devil is indeed in the detail. For example, at the moment Trump keeps talking about an $800+B trade deficit but when you add back capital flows it goes back down to $450B, there is the devil twisting the details to suit his destructive agenda.

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