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The Weekend Quiz – November 10-11, 2018

Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.

1. Government spending which is not accompanied by a bond sale to the non-government sector immediately adds more to total spending than would be the case if there was a bond sale.

2. If the external balance is always in surplus, then the government can safely run a surplus and not impede economic growth.

3. Assume the government increases spending by $100 billion in the each of the next three years from now. Economists estimate the expenditure multiplier to be 1.5 and the impact is immediate and exhausted in each year. They also estimate the tax multiplier to be equal to 1 and the current tax rate is equal to 30 per cent (30 cents in the $). What is the cumulative impact of this fiscal expansion on GDP after three years?

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    This Post Has 6 Comments
    1. Yep 2 out of 3 but all the maths stuff just befuddles me…
      Although I did understand the other two questions so it is sinking in…
      Thanks Bill..:)

    2. To All

      I delete any comments that disclose answers to the Weekend Quiz in advance of Saturday afternoon (16:00 AEST), which is when the answers and explanations are published.

      That gives everyone a chance to attempt the quiz on the same basis – ignorance of the answers.

      I allow boasts (3/3), moans of despair that neoliberalism might hover somewhere in your selves, or whatever, but please be fair to all and not discuss your reasoning or the answers.

      best wishes

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