## 8. Macroeconomic Factors that Influence Interest Rate LevelsApart 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:| Statements | True | False ||------------------------------------------------------------------------------------------------------------------------------------------------------|------|-------|| When the Fed increases the money supply, short-term interest rates tend to decline. | | || 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. | | || During recessions, short-term interest rates decline more sharply than long-term interest rates. | | || When the economy is weakening, the Fed is likely to decrease short-term interest rates. | | |

Macroeconomics is the branch of economics which is concerned with the study of economy as a whole.…

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: Statements When the Fed increases the money supply, short-term interest rates tend to decline. 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. During recessions, short-term interest rates decline more sharply than long-term interest rates. When the economy is weakening, the Fed is likely to decrease short-term interest rates. True False O O O O O O O O

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: Statements When the Fed increases the money supply, short-term interest rates tend to decline. 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. During recessions, short-term interest rates decline more sharply than long-term interest rates. When the economy is weakening, the Fed is likely to decrease short-term interest rates. True False O O O O O O O O

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 6PA

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## 8. Macroeconomic Factors that Influence Interest Rate Levels

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:

| Statements | True | False |
|------------------------------------------------------------------------------------------------------------------------------------------------------|------|-------|
| When the Fed increases the money supply, short-term interest rates tend to decline. | | |
| 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. | | |
| During recessions, short-term interest rates decline more sharply than long-term interest rates. | | |
| When the economy is weakening, the Fed is likely to decrease short-term interest rates. | | |

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