The Weekend Quiz – June 25-26, 2022

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 overall is in deficit, it is still possible for the private domestic sector and government sector to run surpluses and each pay down its debt as long as GDP growth is fast enough (the technical condition is that the rate of GDP growth has to be faster than the real interest rate).



2. National government debt (where there is currency sovereignty) is not really a liability because the government can just roll it over continuously and thus they never have to pay it back. This is different to a household, which not only has to service its debt but also has to repay them at the due date.



3. Even though the money multiplier found in macroeconomics textbooks is a flawed description of the way the monetary system operates, having some positive minimum reserve requirements does constrain credit creation activities of the private banks more than if you have no requirements other than the rule that balances have to be non-zero.





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    This Post Has One Comment

    1. I classifies the second question as 50/50 due to it being related to resposnibility of the government and equatin to the debt of the nation and realistic they should be liable for the debt and the maturity of the capital received in form of the debt but in real life some nations do not and the seizure or collateral asset option is not utilized specifically for certain the comment is not general based on not having that data currently.

      I love the deepfulness of the questions and just read a little bit related to non value behind the so called keynesian economies and just full of respect towards your explanations and presentation related to the topic.

      Best Regards

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