Quiz #369 answers

• 1. 1 The IMF and the OECD equate the Non-Accelerating Inflation Rate of Unemployment (NAIRU) with their concept of full employment and they use the NAIRU to calibrate their structural deficit estimates. Accordingly, their estimates of the structural deficits will typically be:

Answer: biased upwards thus indicating, at any point in the economic cycle, that the government fiscal stance is more expansionary than it actually is.

• 2. 3. Under a fiat monetary system, the absence of currency convertibility means that:

Answer: the government can motivate people to exchange goods and services in return for public spending by fining anyone of working age who walks down the street.

• 3. When a sovereign government issues debt it logically:

Answer: has no impact on the overall holdings of net financial assets in the non-government sector $-for-$.