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The Weekend Quiz – March 2-3, 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. If the inflation rate is steady and the central bank maintains a constant nominal interest rate, then, under current institutional arrangements, the public debt ratio will always increase if the government deficit doubles (say, from 2 to 4 per cent of GDP) although Modern Monetary Theory would not place any special importance in that increase.

2. The real purchasing power of workers' wages rises when the rate of growth in nominal earnings is faster than the growth in labour productivity.

3. A fiscal surplus indicates that the national government is trying to slow the economy down and contain inflation.

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    This Post Has 13 Comments
    1. Stephanie’s article in Bloomberg to-day hit the mark again. Krugman’s pride no doubt prevents him from admitting he is wrong. Someone should tell him: ‘when you find yourself in a hole – stop digging.’

      Remember he is a ‘Nobel Laureate’ so he considers he ‘is the best.’ We, who follow MMT, however know the truth. Time will eventually catch up with and defeat his views.

    2. Yeah, Krugman responded to Stephanie Kelton’s answers to his questions with a twitter stream. He should be embarrassed of it- it’s a joke. He- a professional writer with an excellent command of the English language- posed some very specific questions and demanded Yes or No answers to them with explanations. He phrased the questions the way he preferred to you would think. And Stephanie Kelton was nice enough to give him answers to the actual specific questions he asked in his yes or no format and with explanations. But apparently he doesn’t know what he was asking, or didn’t mean to ask his questions in the way he did. Or everyone who is anyone would understand he was really asking some other question. Or something ridiculous like that. So he, the Nobel Prize winner of sorts, will just declare it a ‘mess’. What a joke. Kelton wiped the floor with him.

    3. Well done Lance! I got 3/3 as well after a fairly poor run- one needs to keep recycling this stuff which why Bill’s approach is so useful.

      You’re always ‘in the game’ though as long as you’re engaged and trying to learn!

    4. 3/3! We are all doing better it seems. Endless repetition seems to be the only way my old brain fully absorbs this.

    5. Jerry said:

      “What a joke. Kelton wiped the floor with him.”

      Kelton and Krugman are talking cross purposes.

      Krugman is talking about debt financing of deficits and Kelton is talking about CB money creation financing of deficits.

    6. 0/3 (again), I’m kind of amazed at how often this happens with Bill’s binary choice tests but there we go, I have a lot to learn.

      Simon, nice meeting you on Friday!

    7. Yes Henry, maybe they are talking cross purposes. But even so, I think Kelton answered the actual specific questions that Krugman posed and that her answers are factually correct. He might have assumed that everyone would have the same assumptions as to what his questions were asking as he did but then he probably does not do a lot of Bill’s weekend quizzes. Maybe he should :)

    8. Jerry,

      “I think Kelton answered the actual specific questions that Krugman posed and that her answers are factually correct.”

      They might be correct in the context of deficits financed by CB money creation but not in Krugman’s context.

      Her comments might have had more pertinence if she had been more emphatic about the difference in starting position.

      Krugman’s context is quite clear in the face of his subsequent tweets.

    9. Yes Henry, I have seen Krugman’s subsequent twittering. Key word is ‘subsequent’. I would think it better form to make sure he actually asked the questions he wanted answered rather than moan and groan afterward about how you were actually asking something different and she shoulda knowed what he was asking and therefore Kelton and MMT are just a mess. Screw him- He knew what he was doing- he’s no dumbass. If I can understand MMT he definitely could also. I don’t consider what he did to be honest. That bothers me.

    10. Jerry,

      I’d doubt that Krugman was being shifty.

      I would imagine he thinks that everyone thinks as he does. Deficits are funded by debt raisings – money creation is a big no no.

      It’s probably more like he doesn’t understand what MMT proposes.

      And Kelton probably thought that he was aware of her context.

      Who knows but as far as I was concerned they were talking about different things.

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