Quiz #434

• 1. The non-government sector is immediately wealthier if the government issues bonds to match its net spending (relative to not issuing them at all).
• False
• True
• 2. When a country runs a small current account deficit and the private domestic sector is saving overall, the government cannot run a surplus.
• False
• True
• 3. Ignoring any reserve requirements, a central bank will eliminate any need to conduct open market operations to sustain its target policy rate merelyby paying a positive return on excess overnight reserves.
• False
• True

Quiz #434 answers

• 1. The non-government sector is immediately wealthier if the government issues bonds to match its net spending (relative to not issuing them at all).

Answer: False

• 2. When a country runs a small current account deficit and the private domestic sector is saving overall, the government cannot run a surplus.

Answer: True

• 3. Ignoring any reserve requirements, a central bank will eliminate any need to conduct open market operations to sustain its target policy rate merelyby paying a positive return on excess overnight reserves.

Answer: False