Quiz #55 answers

• 1. The statement that lending is capital-constrained rather than reserve constrained would not apply if the banks had to maintain a reserve ratio of 100 per cent.

Answer: False

• 2. Any person on income support benefits provided by the national government are living of the hard work of those who pay taxes. We consider this is part of being a civilised society.

Answer: True

• 3. A central bank can influence bank lending by charging an increasing price for providing its reserves to the commercial banks while maintaining its target monetary policy rate.

Answer: False

• 4. Has been withdrawn!

Answer: Withdrawn

• 5. While a national government that issues its own currency is not revenue-constrained it is possible that the demands on the budget posed by the need to provide pensions and health care to an increasing proportion of the population will be impossible due to inflation.

Answer: True