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http: /courses aplia com af servlet/quiz quiz_action-take uz&quiz; Aplia: Student Question x eEconomics question Chegg c Lia Dyer, FINK 301 Prin Fin Mgmt Spring 2016 yassine hicham Customer Support Sign Out Home Grades Personalized Reviews Discussion Course Materials The Cost of Money (lnterest Rates) Graded Assignment | Read Chapter 5 | Back to Assignment Due Monday 04.11.16 at 10:45 PM Attempts: Keep the Highest: 14 10. Macroeconomic factors that influence interest rate levels Aa Aa 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 is true or false. Statements True False If the Fed increases the money supply, short-termm interest rates tend to decline When the economy is weakening, the Fed is likely to increase short-term interest rates. In November 2008, the yields on U.S. Treasuries were actually negative. This means that investors were willing to lose money on their investment in U.S. Treasuries as long as most of their invested capital was safe When the economy is weakening, the Fed is likely to decrease short-term interest rates. Flash Pla 03 3.34 © 2004-2016 Aplia. All rights reserved © 2013 Cengage Learning except as noted. All rights reserved. yer WIN 20,0,0,228 Grade It Now Save & Continue Session Timeout Copyright Notices Terms of Use Privacy Notice Security Notice Accessibility eout 59:33 12:29 PM 4/8/2016

Explanation / Answer

Question-1- True

At the time of recession fed increases the money supply to reduce the deflation to stimulate the economy, then interest rate declaine sharply.

Question-2-False

When the economy is wekening then fed want stimulate more borrowing by lowering of short term interest rates.

Question-3-True

When the treasuries facing the negative yields, then their invested amount will be lossed. But in the long run they will get more return than the negative yields time.

Question-4- True

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