Posted by ampontan on Tuesday, January 25, 2011
THERE’S a digression worth noting in a long article about the consumption tax written by Takahashi Yoichi for Gendai Business Online.
Mr. Takahashi writes:
“The following problem appeared on the 2008 Center Test.”
(The Center Test is the preliminary university entrance examination administered every January by the Japanese government for national and public universities. The results are also increasingly being used by private universities. It is similar to the SATs in the United States.)
“Question: Select one from among the following as the most suitable measure it is thought a central bank can take.
1. Reduce the money supply during a deflationary period.
2. Reduce the required ratio of cash reserves to deposits during an inflationary period.
3. Purchase government bonds from commercial banks during an economic downturn.
4. Reduce the interest rate on funds lent to commercial banks during an economic upturn.
“Of course the correct answer is #3. Since 2000, however, the Bank of Japan has actually done #1. This question can be answered by the ordinary high school student, but it seems to be too difficult for the Governor of the Bank of Japan, the academics carrying water for the Bank of Japan, and the mass media.”
Reat that again and let it sink in: This is information a Japanese high school senior who wants to attend university is expected to know. Not the elite universities—any university.
How many American high school seniors would know the answer to that question? Wait, scratch that—how many American college seniors would know the answer to that question? Wait, scratch that one too—how many American (or Western) adults with a university degree would know the answer to that question?
And some people think there’s a crisis because the youth of Japan is shunning American universities?
I think not.
Here’s what American students know about school and U.S. bonds.