Quiz #464 answers

• 1. In the endogenous money system that exists today, a central bank cannot simultaneously reduce bank lending and maintain a given positive target interest rate by increasing the rate that it provides reserves on demand to the commercial banks.

Answer: True

• 2. The fact that a sovereign government is never financially constrained means that it will always be able to provide first-class health care to an ageing population should it have the political will to do so.

Answer: False

• 3. Whether the government records a fiscal deficit when the domestic private sector is spending less than it earns depends on the size of the external deficit.

Answer: False