{"id":2808,"date":"2009-06-13T00:30:05","date_gmt":"2009-06-12T14:30:05","guid":{"rendered":"https:\/\/billmitchell.org\/blog\/?p=2808"},"modified":"2009-06-13T00:30:05","modified_gmt":"2009-06-12T14:30:05","slug":"saturday-quiz-june-13-2009","status":"publish","type":"post","link":"https:\/\/billmitchell.org\/blog\/?p=2808","title":{"rendered":"Saturday Quiz &#8211; June 13, 2009"},"content":{"rendered":"<p>\t\t\t\tWelcome to the <strong>billy blog Saturday quiz<\/strong>. The quiz tests whether you have been paying attention over the last seven days.<\/p>\n<p>See how you go with the following five questions. Your results are only known to you and no records are retained.<br \/>\n<!--more--><br \/>\n<h4>Quiz #13<\/h4><ul>\n<li>1. It is reported that large international buyers of US Government treasury bonds are getting worried that the US deficit is getting too large. If they stop buying the bonds then<\/li><ul><li>this will lead to the US dollar being abandoned as the convertible currency.<\/li><li>this may drive up treasury bond yields but cannot reduce the capacity of the US Government to service its spending program.<\/li><li>the US Government will run out of money and will have to cut back on its spending.<\/li><\/ul>\n<li>2. The fact that the US dollar is the strongest international currency and is in high demand by international investors (including foreign governments) means that the US Government  <\/li><ul><li>has a greater capacity to engage in fiscal expansion because there are more sources of funding available.<\/li><li>has no greater capacity to engage in fiscal expansion than any other sovereign government.<\/li><li>has to balance the inflationary pressures from pumping dollars into the economy with the political need to reduce unemployment.<\/li><\/ul>\n<li>3. If investors started to worry about the size of the Australian Government deficit and demand for federal public debt fell<\/li><ul><li>the rise in interest rates (yields) would reflect the desire of the Government to have higher interest rates.<\/li><li>the rise in interest rates (yields) would reflect the fact that the deficits were drawing on scarce private savings and increasing competition for them.<\/li><li>the rise in interest rates (yields) would require the Government to reduce net spending.<\/li><\/ul>\n<li>4. Even if the government issues debt voluntarily in association with its deficits, the public debt is still<\/li><ul><li>inherited by the next generation and reduces their possibilities as a consequence.<\/li><li>is a benefit to existing investors who voluntarily choose them at the issue prices over holding other assets including low return bank reserves.<\/li><li>ultimately reduces the capacity of the government to continue spending.<\/li><\/ul>\n<li>5. When the Australian government issues debt it logically <\/li><ul><li>increases the assets that are held by the non-government sector $-for-$.<\/li><li>reduces the capacity of the private sector to borrow from banks because they use their deposits to buy the bonds.<\/li><li>has no impact on the overall holdings of assets held by the non-government sector $-for-$.<\/li><\/ul>\n<\/ul>\n<h3>Sorry, quiz 13 is now closed.<\/h3>\n\t<p> scroll down to  find the answers and explanation below.\n\t<br\/><br\/><br\/><br\/><br\/><br\/><br\/><br\/><br\/><br\/><br\/><br\/><br\/><br\/><br\/><br\/>\n\t<h4>Quiz #13 answers <\/h4><ul>\n<li>1. It is reported that large international buyers of US Government treasury bonds are getting worried that the US deficit is getting too large. If they stop buying the bonds then<\/li><p>Answer: this may drive up treasury bond yields but cannot reduce the capacity of the US Government to service its spending program.<\/p><p>Explanation: Please read <a href=\"https:\/\/billmitchell.org\/blog\/?p=2756\">Public ownership rules airport rankings!<\/a> for further material or post a comment if you want further explanation.<\/p>\n<li>2. The fact that the US dollar is the strongest international currency and is in high demand by international investors (including foreign governments) means that the US Government  <\/li><p>Answer: has no greater capacity to engage in fiscal expansion than any other sovereign government.<\/p><p>Explanation: Please read <a href=\"https:\/\/billmitchell.org\/blog\/?p=2756\">Public ownership rules airport rankings!<\/a> for further material or post a comment if you want further explanation.<\/p>\n<li>3. If investors started to worry about the size of the Australian Government deficit and demand for federal public debt fell<\/li><p>Answer: the rise in interest rates (yields) would reflect the desire of the Government to have higher interest rates.<\/p><p>Explanation: Please read <a href=\"https:\/\/billmitchell.org\/blog\/?p=1266\">Will we really pay higher interest rates?<\/a> for further material or post a comment if you want further explanation.<\/p>\n<li>4. Even if the government issues debt voluntarily in association with its deficits, the public debt is still<\/li><p>Answer: is a benefit to existing investors who voluntarily choose them at the issue prices over holding other assets including low return bank reserves.<\/p><p>Explanation: Please read <a href=\"https:\/\/billmitchell.org\/blog\/?p=1266\">Will we really pay higher interest rates?<\/a> for further material or post a comment if you want further explanation.<\/p>\n<li>5. When the Australian government issues debt it logically <\/li><p>Answer: has no impact on the overall holdings of assets held by the non-government sector $-for-$.<\/p><p>Explanation: Please read <a href=\"https:\/\/billmitchell.org\/blog\/?p=1266\">Will we really pay higher interest rates?<\/a> for further material or post a comment if you want further explanation.<\/p>\n<\/ul>\n\t\t<\/p>\n","protected":false},"excerpt":{"rendered":"<p>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 five questions. Your results are only known to you and no records are retained.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[58],"tags":[],"class_list":["post-2808","post","type-post","status-publish","format-standard","hentry","category-saturday-quiz","entry","no-media"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=\/wp\/v2\/posts\/2808","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2808"}],"version-history":[{"count":0,"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=\/wp\/v2\/posts\/2808\/revisions"}],"wp:attachment":[{"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2808"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2808"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/billmitchell.org\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2808"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}