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The Weekend Quiz – September 11-12, 2021

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 we assume that inflation is stable, there is excess productive capacity, and the central bank maintains its current monetary policy setting then if government spending increases by $X dollars and private investment and exports are unchanged, the sum of changes to taxation revenue, import spending and household saving will be greater than $X dollars because of the expenditure multiplier.

2. When a government such as the US government voluntarily constrains itself to borrow to cover its net spending position, it substitutes its spending for the borrowed funds and logically reduces the non-government capacity to spend.

3. The crucial difference between a monetary system based on the convertible currency backed by gold and a fiat currency monetary is that under the former system:

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