Quiz #573

• 1. Italy is currently in crisis but would have to undergo a period of austerity if it restored its currency and renegotiated all Euro debts into the New Lira (that is, defaulted) because investors would be reluctant to purchase Italian government debt.
• False
• True
• 2. If policy makers use NAIRU estimates to compute the decomposition between structural and cyclical fiscal balances and these estimates are above the true full employment unemployment rate, then the estimated impact of the automatic stabilisers will always be biased downwards.
• False
• True
• 3. Central bank balance sheet management aimed at controlling the yields on public debt at all maturities may not have much impact on the term structure during periods of high inflation.
• False
• True
• 4. ECB boss Christine Lagarde told the world on Thursday (March 12, 2020) that "we are not here to close spreads, that's not function of ECB".
• She should be sacked
• There is no other option

Quiz #573 answers

• 1. Italy is currently in crisis but would have to undergo a period of austerity if it restored its currency and renegotiated all Euro debts into the New Lira (that is, defaulted) because investors would be reluctant to purchase Italian government debt.

Answer: False

• 2. If policy makers use NAIRU estimates to compute the decomposition between structural and cyclical fiscal balances and these estimates are above the true full employment unemployment rate, then the estimated impact of the automatic stabilisers will always be biased downwards.

Answer: True

• 3. Central bank balance sheet management aimed at controlling the yields on public debt at all maturities may not have much impact on the term structure during periods of high inflation.

Answer: True

• 4. ECB boss Christine Lagarde told the world on Thursday (March 12, 2020) that "we are not here to close spreads, that's not function of ECB".

Answer: She should be sacked