If the Fed decides to sell T-bills, it increases the supply of T-bills. How will this affect the price of T-bills and the interest rate?
A. T-bill prices fall and interest rates fall.
B. T-bill prices rise and interest rates rise.
C. T-bill prices rise and interest rates fall.
D. T-bill prices fall and interest rates rise.
Answer: D
You might also like to view...
Calculate the income elasticity if an 8 percent increase in income leads to a 4 percent increase in quantity demanded for organic produce
A) -0.66 B) 0.5 C) 1.5 D) 2
The price of wheat has fallen since 1950. Which of the following explains this price decline?
A) The price elasticity of demand is less than 1 (in absolute value) and wheat is an inferior good. B) The price elasticity of demand is greater than 1 (in absolute value) and the income elasticity of demand for wheat is greater than 1. C) The price elasticity of demand is greater than 1 (in absolute value) and the income elasticity of demand for wheat is low. D) The price elasticity of demand is less than 1 (in absolute value) and the income elasticity of demand for wheat is low.