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The Weekend Quiz – April 11-12, 2020

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 public debt ratio will always fall when economic growth is positive because the primary fiscal deficit falls due to the automatic stabilisers (more tax revenue, less welfare spending), and, the denominator, GDP rises.

2. The Bank of England will, under a new arrangement with H.M. Treasury, be able to credit bank accounts on behalf of government, without the government having to match its fiscal deficits with private debt issuance. This means they will not be able to maintain an interest rate target above zero per cent.

3. One important lesson to be drawn from Modern Monetary Theory (MMT), which is overlooked in the current pandemic, is that when economic growth resumes, the automatic stabilisers work will ensure that the government fiscal balance returns to its appropriate level.

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    This Post Has One Comment
    1. I was initially heartened by the Federal government embracing fiscal stimulus in response to Covid-19 only to hear the neo-liberal nonsense about ‘snap back’ and ‘how many years will it take to pay back the debt’.
      Is anyone one in the political hierarchy in Australia talking to you or other MMT economists?
      Also how can I enrol in MMTed?
      Paul Jones

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