If the Fed decreases interest rates through open market operations, then:Investors and consumers are encouraged to invest and spend more.Real GDP growth will fall.Inflation will decline.All of the above.In inflation targeting, the Fed should ______ interest rates when inflation is ______ the target rate.increase, above increase, below not change, below decrease, aboveA bond currently selling at a premium price above face value:As a yield equal to its coupon rate.Has a yield below its coupon rate.Has a yield above its coupon rate.Has no risk.4. If market interest rates fall after a bond is issued, the:Face value of the bond increases.Investors will sell the bond.The market value of the bond is increasing.the market value of the bond is decreasing

Theoretical underpinnings of the questions 1. As rate of interest decreases the investor will borrow…

Answered: Investors and consumers are encouraged…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the Fed decreases interest rates through open market operations, then:
1. Investors and consumers are encouraged to invest and spend more.
2. Real GDP growth will fall.
3. Inflation will decline.
4. All of the above.
In inflation targeting, the Fed should ______ interest rates when inflation is ______ the target rate.
1. increase, above
2. increase, below
3. not change, below
4. decrease, above

A bond currently selling at a premium price above face value:
1. 1. As a yield equal to its coupon rate.
  2. Has a yield below its coupon rate.
  3. Has a yield above its coupon rate.
  4. Has no risk.

4. If market interest rates fall after a bond is issued, the:

1. 1. 1. Face value of the bond increases.
    2. Investors will sell the bond.
    3. The market value of the bond is increasing.
    4. the market value of the bond is decreasing

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