- 1. Almost every nation can achieve full employment if they have sufficient foreign reserves.
Answer: False
Explanation: Please read Current accounts and currencies for further information or post a question on the comments page for clarification.
- 2. A national government budget surplus results from tax revenue exceeding spending and thus can be seen as "forced saving" (unspent private income). A deficit is the opposite and thus undermines total saving.
Answer: False
Explanation: Please read Current accounts and currencies for further information or post a question on the comments page for clarification.
- 3. The Australian central bank (RBA) decision to raise interest rates is designed to increase the rates banks have to pay to attract deposits and thus undermines their capacity to make loans and fuel a renewed credit binge.
Answer: False
Explanation: Please read Being careful not to swear in Dubai for further information or post a question on the comments page for clarification.
- 4. A central bank can always maintain zero short-term nominal interest rates.
Answer: True
Explanation: Please read Criminal negligence (n)OTT for further information or post a question on the comments page for clarification.
- 5. While the crowding out hypothesis does not apply to budget deficits in a normal range, the fact that bond yields ultimately rise if the bond markets get saturated with government debt confirms that there is an upward effect on interest rates at some point from continued deficits.
Answer: False
Explanation: Please read Criminal negligence (n)OTT for further information or post a question on the comments page for clarification.