Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern…
Saturday Quiz – August 29, 2015
Welcome to the Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.
Quiz #336
- 1. Financial market commentators watch movements in government bond yields as a guide to the state of confidence in the capacity of the respective governments to honour their liabilities. In this context, the commentators are correct when they conclude that rising yields on a particular 10-year bond yields are a sign that bond markets believe the assets to be riskier and are demanding increased risk premiums for them.
- False
- True
- 2. Continually expanding the money supply will eventually lead to inflation.
- False
- True
- 3. While a currency-issuing government does not have to issue debt to the non-government sector to match its deficit spending, it does reduce the inflation risk embodied in the spending because it drains the purchasing power of the private sector which gives itself more nominal spending space.
- False
- True
Sorry, quiz 336 is now closed.
You can find the answers and discussion here
Does the answer to question 1 depend on whether the government bonds are issued in a currency that the government issues? Couldn’t rising yields on say Greek bonds indicate increased risk premiums?
I have a question that maybe someone could help me out with. At another blog this was the statement- “the U.S. consumes far less than it produces, just like Germany – Consumption is only about 70% of GDP”. I think there is something wrong about this statement, but I can’t figure out exactly what it might be. Maybe there is nothing wrong with it.