Question

1. Lower interest rates in the market imply

   		lower levels of investment and consumption
   		higher levels of investment and consumption
   		lower levels of investment but higher levels consumption
   		higher levels of investment but lower levels consumption

2. When interest rates go up, the price of T-bills

   		increases
   		decreases
   		does not change
   		cannot determine what happens

3. Quantitative easing is

   		open-market purchases of assets other than Treasury bills
   		open-market sales of assets other than Treasury bills
   		unrelated to monetary policy
   		none of the above

Answer 1

1 - Option B

Higher level of investment and consumption

This is because the lower interest rates envourage the cheaper borrowing thus encouraging more investment and consumption

2 - Option B

Decreases

When the interest rates rise , the yields go up and the price fall.

3 - Option A

Open market purchases of asstes other than treasury bill.

All the long term financial assets are purchased in the quantitative easing. Treasury bill is a short term asset and hence not included in this policy.