Quiz #672

• 1. As a matter of accounting, the financial assets held by the non-government sector immediately rise $-for-$ when a sovereign government issues debt.
• False
• True
• 2. When government bond yields for new issues start to rise, government spending becomes more expensive.
• False
• True
• 3. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the domestic private sector cannot reduce its overall debt levels (by saving) without incurring employment losses.
• False
• True

Quiz #672 answers

• 1. As a matter of accounting, the financial assets held by the non-government sector immediately rise $-for-$ when a sovereign government issues debt.

Answer: False

• 2. When government bond yields for new issues start to rise, government spending becomes more expensive.

Answer: False

• 3. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the domestic private sector cannot reduce its overall debt levels (by saving) without incurring employment losses.

Answer: True