Quiz #129

• 1. When a sovereign government issues debt the overall holdings of financial assets held by the non-government sector $-for-$ does not change.
• False
• True
• 2. Ignoring any reserve requirements that might be imposed, if the central bank pays a positive interest rate on overnight reserves held by the commercial banks then it may still have to conduct open market operations as a means of ensuring that levels of bank reserves are consistent with its policy target rate of interest.
• False
• True
• 3. If participation rates are constant, percentage unemployment will not change as long as employment growth matches the pace of growth in the working age population (people above 15 years of age).
• False
• True
• 4. National government taxation creates unemployment, other things equal.
• False
• True
• 5. Premium Question: Mainstream monetary theory highlights the concept of a money multiplier which says that the money supply is some multiple of the monetary base (bank reserves and currency). There is a direct relationship between the monetary base and the the money supply in a modern monetary economy.
• False
• True