24. When the Fed sell Treasury sccuritics supply curve federal funds rate A. lef

Question

24. When the Fed sell Treasury sccuritics supply curve federal funds rate A. lef, decreases. B. right, increases. C. right, decreases and the left, increases. 25. If the Fed increases the federal funds rate, what part of the supply curve moves? A. Vertical section moves to the left B. Horizontal section moves down c Horizontal section moves up D. Vertical section moves to the right 26. If the Fed increases the reserve requirement what happens? A. The demand curve shifts to the right and the federal funds rate decroases B. The demand curve shifts to the right and the federal funds rate increases C. The demand curve shifts to the left and the foderal funds rate increases. D. The demand curve shifts to the left and the foderal funds rate decreases. 27. When there occurs an economic boom, the supply curve shifts to the the ' and the supply curves moves demand curve shifts tothe demand curve than the A. left, left, less. B. left, left, more. C. right, right, more D. right, right, less. 28. Debt issued by Southeastern Corporation has a coupon of 10%and currently yields 10.00% A municipal bond of equal risk currently has a coupon of 6% and yields 600%. Your marginal tax bracket is 35% which investment is a better buy? A. Corporate bond B. Municipal bond C None, they have the same yield 29. There is an economic boom such that default risk of businesses has decreased. The demand for Treasury bonds has the and the spread has demand for corporate bonds has A. decreased, increased, widened B. decreased, increased, narrowed C increased, decreased, narrowed Page 7 of 12

Explanation / Answer

24) When the Fed sell Treasury securities supply curve shift to the left and the federal fund rate increases.

25) If the Fed increases the federal fund rate vertical section of the supply curve moves to the left.

26) If the fed increases the reserve requirement the demand curve shift to the right and federal fund rate increases.

27) When there occurs an economic boom the supply curve shifts to the right, the demand curve shifts to the right, and the supply curve moves more than the demand curve.

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