Quiz #355 answers

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

Answer: False

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

Answer: False

• 3. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the domestic private sector cannot bring its spending more closely in line with its income by increasing saving without incurring employment losses.

Answer: True