Quiz #36

• 1. The more reserves the commercial banking system has the more likely it is to lend.
• False
• True
• 2. The money multiplier concept is predicated on the notion that banks only lend when they have reserves and they get them by attracting deposits.
• False
• True
• 3. The saying "Investment brings forth its own saving" refers to the fact that the non-government sector is not sovereign in the currency and has to finance its spending.
• False
• True
• 4. The private domestic sector overall can never save if there is a current account deficit and the government continually balances its budget.
• False
• True
• 5. After a downturn where governments have run large budget deficits, the only way to reduce the stockpile of public debt is for the government to run surpluses in the future.
• False
• True