Quiz #576 answers

• 1. In a fixed coupon government bond auction, the higher is the demand for the bonds, the higher the yields will be at that asset maturity which suggests that larger fiscal deficits will eventually drive short-term interest rates down

Answer: False

• 2. If the non-government sector desires to net save in the currency of issue and acts accordingly, national income (GDP) adjustments will ensure the government sector is in deficit, irrespective of the intentions of the government.

Answer: True

• 3. The more public debt a currency-issuing government voluntarily issues the more difficult it is for banks to attract deposits to initiate loans from.

Answer: False