The Weekend Quiz – July 30-31, 2022

Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blog posts that I post. See how you go with the following questions. Your results are only known to you and no records are retained.

Quiz #694

  • 1. Over the last several decades, central banks and treasuries have used the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) to define full employment and calibrate their estimates of the state of the economic cycle. Accordingly, these estimates will typically be:
    • biased downwards indicating they think the economy is further away from full employment than it actually is.
    • biased upwards indicating they think that the economy is closer to full employment than it actually is.
    • difficult to assess because their forecasts are subject to forecasting inaccuracy.
  • 2. 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.
  • 3. Only one of the following statements can be true when you observe rising government bond yields for new issues:
    • Government spending is becoming more expensive.
    • Bond prices are falling in response to demand.
    • Government spending is increasing the cost of borrowing for private investors.

Sorry, quiz 694 is now closed.

You can find the answers and discussion here

Back To Top