Quiz #584

• 1. When an economy is running a current account deficit, national income movements will ensure that only one of the two remaining sectors (government and private domestic) ends up spending less than they receive, irrespective of the GDP growth rate.
• False
• True
• 2. Unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government debt, which issues its own currency can always roll over its "own currency" debt obligations and never has to pay them back.
• False
• True
• 3. Standing facilities (credit lines etc) that central banks maintain means that the monetary base always adjusts to the changes in the money supply.
• False
• True

Quiz #584 answers

• 1. When an economy is running a current account deficit, national income movements will ensure that only one of the two remaining sectors (government and private domestic) ends up spending less than they receive, irrespective of the GDP growth rate.

Answer: True

• 2. Unlike a household which not only has to service its debt obligations over the course of the loan but also has to repay them at the due date, a national government debt, which issues its own currency can always roll over its "own currency" debt obligations and never has to pay them back.

Answer: False

• 3. Standing facilities (credit lines etc) that central banks maintain means that the monetary base always adjusts to the changes in the money supply.

Answer: True