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…
Welcome to The Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.
- 1. When a sovereign government issues debt it logically:
- Increases the financial assets that are held by the non-government sector $-for-$.
- Has no impact on the overall holdings of financial assets held by the non-government sector $-for-$.
- Reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds
- 2. Only one of the following statements is definitely true when you observe rising government bond yields for new issues:
- Government spending is increasing the cost of borrowing for private investors.
- Bond prices are falling in response to falling demand.
- Government spending is becoming more expensive.
- 3. Open market operations as a means of ensuring that levels of bank reserves are consistent with the policy interest rate target becomes 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).
Sorry, quiz 400 is now closed.
You can find the answers and discussion here