Quiz #500 answers

• 1. The mainstream the Quantity Theory of Money claims that growth in the stock of money will be inflationary. The fact that the recent practice of large-scale quantitative easing (so-called printing money) in many nations has not generated any inflationary impulses is evidence that this 'Theory' is flawed.

Answer: False

• 2. Bank lending is capital-constrained rather than reserve constrained. If the central bank forced banks to maintain a reserve ratio of 100 per cent then lending would also be reserve constrained.

Answer: False

• 3. The fact that a sovereign government is never financially constrained means that they can always provide first-class health care even with rising dependency ratios associated with population ageing.

Answer: False