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The Weekend Quiz – January 12-13, 2019

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. In a nation running an on-going external deficit, if the private domestic sector decides to increase the extent that it spends less than its overall income, then the national government has to increase its discretionary fiscal deficit in order to avoid rising employment losses.



2. The build-up of Chinese holdings of US government debt has allowed US citizens to enjoy a higher material standard of living at the expense of the residents of China.



3. Short-term interest rates are set by the central bank while the fiscal strategy manifests in tax and spending decisions by the government. Whereas the non-government sector cannot directly influence the interest rate target being set, it does, ultimately, determine the size of the fiscal deficit at any point in time.





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    This Post Has 6 Comments
    1. Dear Bill,

      “if the private domestic sector decides to increase the extent that it spends less than its overall income”

      I can’t work out what this part of the sentence means. Can you help?

      Regards,
      Dave.

    2. Dear David Kelley (at 2019/01/11 at 9:10 pm)

      I can only say that it means what it says, which I know probably doesn’t help.

      Work through it word for word. There is not trick meaning involved.

      best wishes
      bill

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