Homework Answers
Option A) true
in monetray Black hole, Interest rates are stuck at zero, & so further Quantitative easing or Expansionary monetray policy, which tends to stimulate Economy by reducing interest rates , is not effective
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Question: A "monetary black hole" describes when interest rates fall below zero. True False •
QUESTION 9 Select all of the following that are true regarding interest rates: Interest rates on...
QUESTION 9 Select all of the following that are true regarding interest rates: Interest rates on bonds rise when the demand for bonds increases regardless of risk US Quantitative Easing causes all interest rates to fall Interest rates fall when the economy grows since the central bank is providing stimulus As the yield curve flattens, all interest rates fall Interest rates are controlled by the central bank Interest rates fall to attract investors since it indicates lower risk
A bank manager would want to set the duration gap greater than zero when interest rates...
A bank manager would want to set the duration gap greater than zero when interest rates are expected to rise. True or False True False
QUESTION 7 All bonds have equal risk of default and thuspay equal rates of interest. True...
QUESTION 7 All bonds have equal risk of default and thuspay equal rates of interest. True False QUESTION 8 When expected inflation increases and there is no change in nominal interest rates then real interest rates fall. True O False QUESTION 9 Suppose the interest rate in Australia is 1.796, and the expected Australian inflation rate is 0.8%. The real interest rate is O 0.9 O 1.0 O 1.1 O 1.2 QUESTION 10 Suppose the interest rate in New Zealand...
The more responsive investment spending is to changes in interest rates, the more effective monetary policy...
The more responsive investment spending is to changes in interest rates, the more effective monetary policy will be True or False - why?
A bank manager would want to set the repricing gap greater than zero when interest rates...
A bank manager would want to set the repricing gap greater than zero when interest rates are expected to rise. True/False and why
QUESTION 5 Select all of the following that are true regarding interest rates and foreign exchange...
QUESTION 5 Select all of the following that are true regarding interest rates and foreign exchange rates, ceteris p aribus Interest rate parity between countries is a reasonable assumption due to arbitrage and floating exchange rates When a domestic currency depreciates, domestic interest rates rise When domestic interest rates rise the domestic currency depreciates When domestic interest rates rise due to monetary policy, the domestic currency appreciates solely because of the decreased supply of the domestic currency
Question 1 0.75 pts The table below describes output and interest rates in Westeros from 2012...
Question 1 0.75 pts The table below describes output and interest rates in Westeros from 2012 to 2015. Which of the following events best explains the movement in the economy between 2013 and 2014? Year Interest Rate Output Gap 0.03% 2012 4.2% 2013 -1.12% 3.6% 2.1% 2014 -0.74% 2015 -0.21% 2.4% The central bank begins conducting expansionary monetary policy. O Investor confidence begins declining. The economy begins the slow recovery to steady-state equilibrium. The central bank sells government bonds.
True or False: Forward interest rates are the rates of interest implied by current par yields...
True or False: Forward interest rates are the rates of interest implied by current par yields for period of time in the future.
Zero-coupon bonds typically provide Zero interest True False
Zero-coupon bonds typically provide Zero interest True False
Tightening monetary policy causes interest rates to __________ and aggregate demand to __________. Group of answer...
Tightening monetary policy causes interest rates to __________ and aggregate demand to __________. Group of answer choices rise / increase fall / increase rise / decrease fall / decrease
QUESTION 9 Select all of the following that are true regarding interest rates: Interest rates on bonds rise when the demand for bonds increases regardless of risk US Quantitative Easing causes all interest rates to fall Interest rates fall when the economy grows since the central bank is providing stimulus As the yield curve flattens, all interest rates fall Interest rates are controlled by the central bank Interest rates fall to attract investors since it indicates lower risk
A bank manager would want to set the duration gap greater than zero when interest rates are expected to rise. True or False True False
QUESTION 7 All bonds have equal risk of default and thuspay equal rates of interest. True False QUESTION 8 When expected inflation increases and there is no change in nominal interest rates then real interest rates fall. True O False QUESTION 9 Suppose the interest rate in Australia is 1.796, and the expected Australian inflation rate is 0.8%. The real interest rate is O 0.9 O 1.0 O 1.1 O 1.2 QUESTION 10 Suppose the interest rate in New Zealand...
QUESTION 5 Select all of the following that are true regarding interest rates and foreign exchange rates, ceteris p aribus Interest rate parity between countries is a reasonable assumption due to arbitrage and floating exchange rates When a domestic currency depreciates, domestic interest rates rise When domestic interest rates rise the domestic currency depreciates When domestic interest rates rise due to monetary policy, the domestic currency appreciates solely because of the decreased supply of the domestic currency
Question 1 0.75 pts The table below describes output and interest rates in Westeros from 2012 to 2015. Which of the following events best explains the movement in the economy between 2013 and 2014? Year Interest Rate Output Gap 0.03% 2012 4.2% 2013 -1.12% 3.6% 2.1% 2014 -0.74% 2015 -0.21% 2.4% The central bank begins conducting expansionary monetary policy. O Investor confidence begins declining. The economy begins the slow recovery to steady-state equilibrium. The central bank sells government bonds.
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