Quiz #205

• 1. A currency-issuing government can always ensure there is first-class services to meet the demands of an ageing population.
• True
• False
• 2. For a nation running a small current account deficit (close to balance), the government budget will always be in deficit if the domestic private sector is spending less than it earns.
• False
• True
• 3. Ignoring laws to the contrary, a central bank currently targetting a 2 per cent short-term policy rate, cannot directly purchase treasury debt to facilitate the national governments budget deficit (that is, "monetise the deficit") and continue to maintain its policy rate at 2 per cent.
• True
• False

Quiz #205 answers

• 1. A currency-issuing government can always ensure there is first-class services to meet the demands of an ageing population.

Answer: False

• 2. For a nation running a small current account deficit (close to balance), the government budget will always be in deficit if the domestic private sector is spending less than it earns.

Answer: True

• 3. Ignoring laws to the contrary, a central bank currently targetting a 2 per cent short-term policy rate, cannot directly purchase treasury debt to facilitate the national governments budget deficit (that is, "monetise the deficit") and continue to maintain its policy rate at 2 per cent.

Answer: False