Quiz #461 answers

• 1. The central bank can influence the supply of money via the price it provides reserves to the commercial banks but this influence is compromised by the level at which it sets the target monetary policy rate.

Answer: True

• 2. If the private domestic sector spends less than it earns and the nation runs a small external deficit, then the government fiscal balance will always be in deficit at all levels of national income.

Answer: True

• 3. A central bank can easily purchase treasury debt directly to satisfy accounting arrangements relating to the national governments fiscal deficit (that is, "monetise the deficit") while still targeting a positive short-term policy rate.

Answer: True