Quiz #383

• 1. The price at which the central bank provides reserves to the commercial banks is restricted by its target monetary policy rate.
• False
• True
• 2. It would be impossible for a central bank to directly purchase treasury debt to facilitate the national governments fiscal deficit (that is, "monetise the deficit") while still targeting a positive short-term policy rate.
• False
• True
• 3. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.
• False
• True

Quiz #383 answers

• 1. The price at which the central bank provides reserves to the commercial banks is restricted by its target monetary policy rate.

Answer: True

• 2. It would be impossible for a central bank to directly purchase treasury debt to facilitate the national governments fiscal deficit (that is, "monetise the deficit") while still targeting a positive short-term policy rate.

Answer: False

• 3. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.

Answer: False