Saturday Quiz – September 1, 2012

Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.

Quiz #180

• 1. As a matter of accounting, the financial assets held by the non-government sector rise $-for-$ when a sovereign government issues debt.
• False
• True
• 2. If yields rise on new bond issues then deficit spending by a currency-issuing government becomes more expensive.
• False
• True
• 3. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the domestic private sector cannot reduce its overall debt levels (by saving) without incurring employment losses.
• False
• True
• 4. The imposition of fiscal rules which aim to limit the discretionary capacity of governments to net spend bias fiscal policy towards counter-cyclical responses when private spending is weak.
• False
• True
• 5. Premium Question: Open market operations as a means of ensuring that levels of bank reserves are consistent with the policy target become redundant if the central bank pays a positive interest rate on overnight reserves held by the commercial banks (ignore any reserve requirements in place when answering).
• False
• True

Sorry, quiz 180 is now closed.

You can find the answers and discussion here