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The Weekend Quiz – April 6-7, 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 external sector is in deficit overall and GDP growth rate is faster than the real interest rate, then both the private domestic sector and the government sector overall can reduce their overall respective net liabilities.

2. The debt of a government which issues its own currency and floats it in international markets is not really a liability because the government can just continuously roll it over without ever having to pay it back. This is different to a household, the user of the currency, which not only has to service its debt obligations but also has to repay them at the due date.

3. The fact that large scale quantitative easing conducted by central banks in Japan in 2001 and now, more recently, in the UK and the USA has not caused inflation provides a strong refutation of the mainstream Quantity Theory of Money, which claims that growth in the stock of money will be inflationary.

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    This Post Has 4 Comments
    1. Well I got all of them ‘correct’. But I don’t agree about #3 and I think Warren Mosler didn’t agree either the last time a similar question was in the quiz. Maybe I will come up with a better argument this time. Just out of curiosity- is there any chance that any argument, no matter how good, might make a difference?

    2. Bill, I’m sure you’ll explain it, but how does Q3 account for the trebling of the base money without inflation due to QE? I’ve seen a lot of Steve Keen and he seems to believe that does debunk QTM. Eitber way, just want to extend my thanks for your tremendous work for mmt and economics as a whole!

    3. Well I got 3/3 but but number 1 made me think hard. Number 3 is tricky too. And number 2. Basically tricky. Will await explanations.

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