The Weekend Quiz – May 26-27, 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. As long as employment growth keeps pace with labour force growth, unemployment will not rise.



2. Modern Monetary Theory shows that governments do not have to issue debt to match their deficit spending. However, by issuing debt, the wealth of the non-government sector immediately increases, which would not happen if the central bank just credited bank accounts on behalf of the treasury without the debt matching.



3. If the current account balance is running at 2 per cent of GDP, and the private domestic sector overall is saving an equivalent of 3 per cent of GDP, the government must:







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    6 Responses to The Weekend Quiz – May 26-27, 2018

    1. Brian Stobie says:

      Hi Prof. Mitchell,
      The Scottish Government has published its ‘Scottish Growth Commission Report’
      https://www.sustainablegrowthcommission.scot
      claiming how it will grow an independent Scotland’s economy.
      Unfortunately the Commission advise using the UK pound for ‘an extended period’ after independence, eventually thinking about a new currency. Even worse, it refers to government deficits and ‘debt’ in completely mainstream language, even claiming that government should meet a deficit target of 3% of GDP in 5 to 10 years, and that (even more bizarrely) national debt should be no larger than 50% of GDP and stabilise at that level. It’s not clear whether these targets are expected to be met while borrowing sterling or when using the new currency.

      If you could find the time to look over the document and comment it would be very interesting for we few Scots who understand a little about MMT. I know they had better advice than this report suggests, it’s a pity they never listened to it. Unless it is all politics, aimed at what they think people believe?

      Regards,
      Brian

    2. Brian Stobie says:

      Edit: That should be “Sustainable Growth Commission”. Also the Commission is only (bad) advice to the SNP, not SNP policy.

      Brian

    3. Thomas says:

      About the upcoming “introductory and intermediate” MMT textbook…
      The latest estimate for publication date is this November?

      I’m not sure whether to buy the “introductory” version now (the one published in 2016) or wait for the new one.
      If I were to buy the 2016 one, would I (in the UK) get any discount or trade-in value on the new version when it comes out?
      (Maybe it depends on format, ebook vs. paper…)

    4. Lance says:

      Three out of three! Either I’m getting better, or this weeks quiz is a tad easier!

    5. Jerry Brown says:

      “If the current account balance is running at 2 per cent of GDP” … Did anyone else have difficulty understanding that to be a current account surplus? I guessed it meant surplus rather than deficit and got it right but it was still a guess at that point.

    6. cs says:

      Well done Lance! I, alas mistook unemployment for unemployment rate in number 1 and wasn’t sure if “the current account balance is running at 2 per cent of GDP” meant it was in surplus or deficit. I suppose it means “surplus” if it is a positive number. Must try harder ;-)!

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