Quiz #498

• 1. The ECB has announced that it will taper its quantitative easing over the next few months. The steady decline in purchases of government bonds from the non-government sector will reduce the growth of net financial assets in that sector.
• False
• True
• 2. The immediate change in the net worth of the non-government sector when the government increases its net spending is invariant to government issuing debt which exactly matches ($-for-$) the increase in net public spending.
• False
• True
• 3. A rising government deficit will always allow the private domestic sector to increase its overall saving in nominal terms.
• False
• True

Quiz #498 answers

• 1. The ECB has announced that it will taper its quantitative easing over the next few months. The steady decline in purchases of government bonds from the non-government sector will reduce the growth of net financial assets in that sector.

Answer: False

• 2. The immediate change in the net worth of the non-government sector when the government increases its net spending is invariant to government issuing debt which exactly matches ($-for-$) the increase in net public spending.

Answer: True

• 3. A rising government deficit will always allow the private domestic sector to increase its overall saving in nominal terms.

Answer: False