Quiz #362

• 1. A national government which issues its own floating currency is never vulnerable for financial reasons to defaulting on its own outstanding debt.
• False
• True
• 2. If the household saving ratio rises and there is an external deficit, then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.
• False
• True
• 3. Quantitative easing and an expansion of net public spending both add net financial assets to the non-government sector but the former aims to stimulate demand by lowering interest rates while the latter policy choice directly adds spending to the economy.
• False
• True

Quiz #362 answers

• 1. A national government which issues its own floating currency is never vulnerable for financial reasons to defaulting on its own outstanding debt.

Answer: False

• 2. If the household saving ratio rises and there is an external deficit, then Modern Monetary Theory tells us that the government must increase net spending to fill the private spending gap or else national output and income will fall.

Answer: False

• 3. Quantitative easing and an expansion of net public spending both add net financial assets to the non-government sector but the former aims to stimulate demand by lowering interest rates while the latter policy choice directly adds spending to the economy.

Answer: False