Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.
Only one of the following propositions is possible (with all balances expressed as a per cent of GDP):
(a) A nation can run an external deficit with a fiscal surplus of equal proportion to GDP, while the private domestic sector is spending less than they are earning.
(b) A nation can run an external deficit with a fiscal surplus of equal