Quiz #296 answers

• 1. As a matter of accounting, the financial assets held by the non-government sector rise $-for-$ when a sovereign government issues debt to match its current fiscal deficit.

Answer: True

• 2. When government bond yields for new issues start to rise, government spending becomes more expensive.

Answer: False

• 3. Open market operations as a means of ensuring that levels of bank reserves are consistent with the monetary policy target become redundant whenever the central bank pays a positive interest rate on overnight reserves held by the commercial banks (ignore any reserve requirements in place when answering).

Answer: False