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The Weekend Quiz – April 28-29, 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. Modern Monetary Theory teaches us that one of the dangers of public deficits is that they can crowd out private spending.

2. National accounting shows us that a government surplus equals a non-government deficit. But that doesn't mean that if fiscal austerity ends up generating a fiscal surplus that households and firms will be running deficits.

3. The payment of a positive interest return by the central bank on overnight bank reserves does not eliminate the need for it to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements).

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    This Post Has 5 Comments
    1. Oh dear, only 2 out of 3 this week…. but I think I know where I went wrong with number 3 – with Bill’s questions the rule is “always read the question two or three times…. and then read it again, and then deeply question your instinctive response because it is probably on the right track but lacking nuance….

    2. Mike,
      I usually get them all right these days(mostly) but I still do them every week. I honest believe they help keep me “sharp” in general conversation….Take question Q1 for example. I was on a radio show recently and the president of our Economic Society stated exactly the Q1 story( excluding the “Modern Monetary Theory teaches us” part). I was about to “fly into” him but caught myself just in time. I quietly asked: Do you mean financial or real resource crowding out? His reply was, real resource. I agreed.

      Saved by a word….. LOL

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