1-) When long-term interest rates are higher than short-term rates, as they were

ID: 1098843 • Letter: 1

Question

1-) When long-term interest rates are higher than short-term rates, as they were in 2010:

A. it implies that short-term interest rates are expected to fall.

B. it has no implication for short-term interest rates.

C. it implies that inflation will fall.

D. it implies that short-term interest rates are expected to rise.

2-) Suppose a new regulation lowers the interest rates banks can offer on checking account funds. This will result in:

A. a shift leftward of the money demand curve.

B. a shift rightward of the money demand curve.

C. a shift rightward in the money supply curve.

D. a shift leftward in the money supply curve.

3-) (Figure: Monetary Policy and the AD

1-b

2-c

3-b

4-d

5-a

6-a

7-c

8-a

9-d

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