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The Weekend Quiz – November 12-13, 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 government increases its fiscal deficit as a percentage of GDP it will squeeze the real resources available for private productive uses.

2. For a nation running a current account deficit, national income adjustments will ensure government's fiscal position is in deficit no matter what the government's intentions are if the private domestic sector is spending less than its income.

3. Specific legal considerations aside, it would be impossible for a government to avoid issuing debt to the private sector when running a fiscal deficit while the central bank was targeting a positive short-term policy rate.

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