Are you Economically Literate?

N1AK

Generali wrote: »

http://councilforeconed.org/news-information/economic-literacy-quiz/

I got 19/20 and don't agree with their answer to the one I got wrong (Q16). I put B.

It's not a very good question but I think B is a pretty obviously wrong answer. Whether someone pays a meaningful amount of tax or not they get access to government services like the NHS, Pensions, Welfare. Obviously it would be very hard to avoid paying any tax, and thus you could argue that everyone pays towards government services but that seems to be an obtuse interpretation.

That said I'm not sure I like any of the answers as a) which I assume is the correct answer is so unclear as to be borderline unintelligible.

System

Economics A level finally came in handy.

Generali

N1AK wrote: »

It's not a very good question but I think B is a pretty obviously wrong answer. Whether someone pays a meaningful amount of tax or not they get access to government services like the NHS, Pensions, Welfare. Obviously it would be very hard to avoid paying any tax, and thus you could argue that everyone pays towards government services but that seems to be an obtuse interpretation.

That said I'm not sure I like any of the answers as a) which I assume is the correct answer is so unclear as to be borderline unintelligible.

The way I looked at it is what gain do I get for paying for whatever arcane mode of transport it is that they use in Swansea for example? I'm extremely unlikely ever to go to Swansea so it's quite hard to see what utility I gain from putting a horseless carriage facility/turnpike/canal extension in place.

System

Going back to my A Level, with question 16 I recalled a lecture about government providing services, the example was a street light, the government pays for it but everyone benefits.

It went on to say you couldn't make street lights private, he spoke about having a coin slot to turn it on but then how would you stop other people benefitting if you paid? That was why some things needs to be publically provided.

Did I get lucky on that one and totally misunderstand it?

Generali

Joeskeppi wrote: »

Going back to my A Level, with question 16 I recalled a lecture about government providing services, the example was a street light, the government pays for it but everyone benefits.

It went on to say you couldn't make street lights private, he spoke about having a coin slot to turn it on but then how would you stop other people benefitting if you paid? That was why some things needs to be publically provided.

Did I get lucky on that one and totally misunderstand it?

That example is the classic example of something that can't be provided by the private sector and can only be provided by the state. Even then, it's hard to see how I benefit by employing lamplighters in Sunderland.

For specific examples of these sorts of 'Government only' goods (military and foreign office for example) I can see how the Government spending benefits all but for plenty more I don't see it.

mwpt

Question 3 is based on traditional understanding and is most likely still true but imo could come in for debate, given that ZIRP doesn't seem to be having the desired inflationary impact in the short term.

Wednesday2000

I've never studied economics so I was surprised I got quite a few correct. I think this forum is very helpful as I'm sure if I had taken the quiz a few years ago I would have probably only got about 10 or so right.:p

Generali

mwpt wrote: »

Question 3 is based on traditional understanding and is most likely still true but imo could come in for debate, given that ZIRP doesn't seem to be having the desired inflationary impact in the short term.

You think?

I'd imagine most income comes from wages. Even if your house is going up by a gazillion percent a year it's not actually paying you an income, just an imputed rent and most people simply don't have enough non-house assets for their income to make a massive difference to their lives.

mwpt

Generali wrote: »

You think?

I'd imagine most income comes from wages. Even if your house is going up by a gazillion percent a year it's not actually paying you an income, just an imputed rent and most people simply don't have enough non-house assets for their income to make a massive difference to their lives.

Question 3 was about interest rates moving from 5% to 8%. The traditional explanation is this is a tool to discourage inflation by encouraging people to save. Makes sense, sure.

But what I'm saying is that ZIRP has demonstrated that the opposite _may_ not be true. It should be encouraging inflation but doesn't appear to have the desired affect. Are people just hoarding more cash because they see that their desired total savings are becoming harder to achieve as compound interest has been decimated? The only way to achieve the desired sums is to hoard more cash.

That may make us question the opposite view that when interest rates rise and you achieve more interest from the savings in the bank, perhaps you're more inclined to spend a little extra as your desired total becomes easier to achieve through compound interest.

I'm not stating this as fact, just speculating.

Generali

mwpt wrote: »

Question 3 was about interest rates moving from 5% to 8%. The traditional explanation is this is a tool to discourage inflation by encouraging people to save. Makes sense, sure.

But what I'm saying is that ZIRP has demonstrated that the opposite _may_ not be true. It should be encouraging inflation but doesn't appear to have the desired affect. Are people just hoarding more cash because they see that their desired total savings are becoming harder to achieve as compound interest has been decimated? The only way to achieve the desired sums is to hoard more cash.

That may make us question the opposite view that when interest rates rise and you achieve more interest from the savings in the bank, perhaps you're more inclined to spend a little extra as your desired total becomes easier to achieve through compound interest.

I'm not stating this as fact, just speculating.

Oops, I was looking at Q5.

Fair point. Not sure I agree but it's certainly logical in much the same way as a lot of cabbies will keep working until they have made £x in a night and then go home.