Quiz #397 answers

• 1. The extended period of quantitative easing in many nations has not seen inflation accelerate. This strongly refutes the mainstream theory of inflation embodied in the mainstream Quantity Theory of Money, which claims that growth in the stock of money will be inflationary.

Answer: False

• 2. At present, bank lending is capital- rather than reserve constrained. If the central bank forced banks to maintain a 100 per cent reserve ratio then lending would also become reserve constrained.

Answer: False

• 3. In the context of population ageing, a currency-issuing sovereign government can always provide first-class health care to its citizens even in the face of rising dependency ratios.

Answer: False