Which of the following statements is not true with regard to repurchase agreements?
A) In a typical repo, an entity sells government securities and agrees to repurchase them at a higher price the next day.
B) A reverse RP involves borrowing funds overnight.
C) The repo market has evolved into maturities ranging from one day to three months.
D) In practice, a repo is used to raise funds for anything the borrower chooses.
B
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International trade between two countries
A) benefits only the receiving country. B) benefits only the sending country. C) benefits both countries. D) benefits neither country.
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and real GDP falls. b. The quantity of real loanable funds per time period falls, and real GDP rises. c. The quantity of real loanable funds per time period rises, and real GDP remains the same. d. The quantity of real loanable funds per time period and real GDP remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.