Saturday Quiz – March 15, 2014

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 #260

• 1. If the central bank offers a positive interest rate on overnight reserves held by the commercial banks equal to its target policy rate, then it no longer has to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements in place when answering).
• False
• True
• 2. The payment of a positive return on overnight reserves held by the commercial banks equal to the current policy rate will tend to increase the volume of broad money in the system (ignore any reserve requirements in place when answering).
• False
• True
• 3. Modern Monetary Theory (MMT) shows that a sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.
• False
• True

Sorry, quiz 260 is now closed.

You can find the answers and discussion here