Apart from risk components, several macroeconomic factors-such as Federal Reserve (the Fed) policy, federal budget deficit or surplus, international factors, and levels of business activity-influence interest rates.

Based on your understanding of the impact of macroeconomic factors, identify which of the following statements are true or false:

a. Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates.

i. True

ii. False

b. If the Fed injects a huge amount of money into the markets, inflation is expected to decline, and long-term interest rates are expected to rise.

i. True

ii. False

c. When the Fed increases the money supply, short-term interest rates tend to decline.

i. True

ii. False

d. When the economy is weakening, the Fed is likely to decrease short-term interest rates.

i. True

ii. False

Question

Toto

Business

20 April, 08:51

Apart from risk components, several macroeconomic factors-such as Federal Reserve (the Fed) policy, federal budget deficit or surplus, international factors, and levels of business activity-influence interest rates.

Based on your understanding of the impact of macroeconomic factors, identify which of the following statements are true or false:

a. Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates.

i. True

ii. False

b. If the Fed injects a huge amount of money into the markets, inflation is expected to decline, and long-term interest rates are expected to rise.

i. True

ii. False

c. When the Fed increases the money supply, short-term interest rates tend to decline.

i. True

ii. False

d. When the economy is weakening, the Fed is likely to decrease short-term interest rates.

i. True

ii. False

+1

Answers (1)

Know the Answer?

Darren · Answer 1

a. True

b. False

c. True

d. True

Explanation:

Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates.

i. True

b. If the Fed injects a huge amount of money into the markets, inflation is expected to decline, and long-term interest rates are expected to rise.

ii. False

c. When the Fed increases the money supply, short-term interest rates tend to decline.

i. True

d. When the economy is weakening, the Fed is likely to decrease short-term interest rates.

i. True