Quiz #475 answers

• 1. Modern Monetary Theory teaches us that one of the dangers of public deficits is that they can crowd out private spending.

Answer: True

• 2. National accounting shows us that a government surplus equals a non-government deficit. But that doesn't mean that if fiscal austerity ends up generating a fiscal surplus that households and firms will be running deficits.

Answer: True

• 3. The payment of a positive interest return by the central bank on overnight bank reserves does not eliminate the need for it to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements).

Answer: True