Quiz #539

• 1. For nations enjoying strong terms of trade (and external surplus), it is sensible for the government to run fiscal surpluses and accumulate them in a sovereign fund to create more space for non-inflationary spending in the future.
• False
• True
• 2. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.
• False
• True
• 3. It would be impossible for a central bank to directly purchase treasury debt to facilitate the national government's fiscal deficit while still targeting a positive short-term policy rate.
• False
• True

Quiz #539 answers

• 1. For nations enjoying strong terms of trade (and external surplus), it is sensible for the government to run fiscal surpluses and accumulate them in a sovereign fund to create more space for non-inflationary spending in the future.

Answer: False

• 2. A sovereign national government, that is, one that issues its own floating currency faces no solvency risk with respect to the debt it issues.

Answer: False

• 3. It would be impossible for a central bank to directly purchase treasury debt to facilitate the national government's fiscal deficit while still targeting a positive short-term policy rate.

Answer: False