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The Weekend Quiz – October 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. The price at which the central bank provides reserves to the commercial banks is restricted by its target monetary policy rate.

2. For a country facing strong terms and trade and an appreciating currency, a cut in wages and the rate of inflation will restore international competitiveness.

3. If the fiscal deficit rises then government policy is becoming more expansionary.

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    This Post Has 6 Comments
    1. Is the first one there right? Can’t a central bank introduce an interest on reserves policy and then provide reserves at whatever price it wants?

    2. 2/3 I’m learning & improving!
      With all the talk recently on RBA interest cuts & monetary policy I’ve heard on various YouTube channels reference to the “Broken Window Fallacy” used as an argument against Fiscal stimulus. Could you address this topic if you think it warrants attention?

      Oh and thank you for all your tireless work you put into the analysis of Govt Fiscal & Monetary shenanigans.

    3. Tina Ryan: google “broken window fallacy”; a boy breaks a window, creating a job for the glazier…. but the person who has to pay the glazier now has less disposable income…

      Anti fiscal-stimulus people are in effect claiming (incorrectly) a JG will necessarily rob purchasing power from other members of the community. They don’t understand MMT. In fact a JG will increase everyone’s purchasing power – assuming there is underemployment in the economy, which is normally the case in “invisible hand”, neoliberal economies.

    4. Neil Halliday I can’t believe what an athama JG is or more commonly public sector job creation.
      It’s so disheartening to see comments like:
      * “I got it, let’s knock over working stadiums and replace them.”
      * “We needs a recession, to get things back to normality.”
      People generally don’t understand the mechanics of Fiscal & Monetary Policy, including myself, but after hearing Prof. Bill Mitchell discuss MMT I became very keen to learn.

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