Question

Questions 4 to 8 are based on the following information: The interest rate on South Africa’s...

Questions 4 to 8 are based on the following information: The interest rate on South Africa’s 3-Month Treasury bills fell from 6% on 3 February 2020 to 2.66% on 1 May 2020.

4. In terms of the financial market model used in this module, which of the following statement are correct?

a. Compared to February, there has been a decrease in the price paid for 3-Month treasury bills.

b. Compared to February, there has been an increase in the price paid for 3-Month treasury bills.

c. The central bank has employed an expansionary monetary policy.

d. The central bank has employed a contractionary monetary policy

1. Only options a and c

2. Only options a and d

3. Only options b and c

4. Only options b and d

5. None of the options is correct

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Interest Rate has Decreased. Interest rate and Price of treasury bills are Inversely proportional. It means as Interest rate of the treasury bills Decreases, the price of Treasury Bills increases.

Moreover, an Expansionary Monetary Policy would cause the interest rate to fall as the Money supply Increases. Thus, if Interest Rate on 3-month treasury bills has fallen, it must be the case that the central bank has employed an Expansionary Monetary Policy.

Therefore, both statements b and c are correct.

Hence, Option 3 is correct.i.e, only options b and c.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Countercyclical fiscal policy consists of: a. using expansionary fiscal policy during times of recession and...
1. Countercyclical fiscal policy consists of: a. using expansionary fiscal policy during times of recession and contractionary fiscal policy during times of recession. b. using expansionary fiscal policy during times of recession and contractionary fiscal policy during times of expansion. c. using expansionary fiscal policy during times of expansion and contractionary fiscal policy during times of recession. d. using expansionary fiscal policy during times of expansion and contractionary fiscal policy during times of expansion. e. using expansionary fiscal policy and...
The interest rate charged by the central bank when it makes loans to commercial banks is...
The interest rate charged by the central bank when it makes loans to commercial banks is called the Select one: a. reserve requirement. b. prime rate c. discount rate d. open market rate. A bank is more likely to face bank runs by depositors if it Select one: a. is solvent. b. if it thoroughly evaluate risks before lending. c. keeps more of its money it reserves. d. makes risky loans to investors. A contractionary monetary policy reduces GDP by...
A country that has been operating under a fixed exchange-rate regime falls into recession. All attempts...
A country that has been operating under a fixed exchange-rate regime falls into recession. All attempts at using fiscal polecat to lift the economy out of recession have failed. 1. If the central bank was to use monetary policy to help lift the economy out of the recession, it would want to (change, decrease or increase) the money supply and (changes decrease or increase) interest rates in the economy. 2. This change in interest rates would cause net capital outflow...
Required information [The following information applies to the questions displayed below.] Starting in May, Nicole has...
Required information [The following information applies to the questions displayed below.] Starting in May, Nicole has decided that she has everything she needs to open her doors to customers. To keep up with competition, Nicole has added gift certificates and has started to advertise her company more to keep her business going in the long term. Here is a sample of some transactions that occurred in the month of May at Nicole’s Getaway Spa (NGS). May 1 Paid $2,950 cash...
1. For any given increase in reserves, which of the following reduces the money supply creation...
1. For any given increase in reserves, which of the following reduces the money supply creation process?       a. high currency preference among the banking public        b. banks holding large amounts of excess reserves        c. high interest elasticity of money demand        d. both a and b 2. The classical approach to dealing with the Great Depression would have been?        a. do nothing, wait for the long run        b. active fiscal...
53. Which of the following is the Fed’s most important policy interest rate? (a) federal funds...
53. Which of the following is the Fed’s most important policy interest rate? (a) federal funds rate; (b) the rate on 2-year Treasury notes; (c) the rate on 10-year Treasury notes; (d) the rate on 30-year fixed-rate mortgages. 54. In which market would a bank with excess reserves attempt to sell reserves to a bank with insufficient reserves? (a) Treasury bill market? (b) federal funds market; (c) bond market; (d) NASDAQ. 55. When compared with monetarist theory, Keynesian theory places...
Questions 4 through 8 are based on the following fact statement: Complete the following income statement,...
Questions 4 through 8 are based on the following fact statement: Complete the following income statement, including cost of goods sold and answer the five multiple-choice questions below. Credit is given for your answers to the multiple-choice questions only. For each question, circle the letter that is the correct answer. Company X Income Statement FYE 12/31/2020 COLUMN 1 COLUMN 2 COLUMN 3 NET SALES REVENUE 4._________ EXPENSES: COST OF GOODS SOLD Beginning Merchandise Inventory -0-_ Purchases 5.__________ Less: Purchase Returns...
The Kingdom of Wrigley is an archipelago in the South Pacific. The economy is based on...
The Kingdom of Wrigley is an archipelago in the South Pacific. The economy is based on fishing and agriculture, and currently imports more than it exports. The economy is doing well right now, but not great, and the banking system is stable yet fragile. The central bank is not independent and follows the instructions of The King. The King, wanting new economic ideas, and having been told you took a macroeconomics class before moving to the Kingdom, invites you to...
11. Which of the following could cause the US economy to go into a recession? A....
11. Which of the following could cause the US economy to go into a recession? A. None of the choices is correct B. All of the choices are correct C. a declining stock market and an increase in unemployment D. a decrease in Aggregate Demand E. an increase in pessimism by consumers and businesses 12. Which of the following could help pull the US economy out of a recession? A. All of the choices are correct B. declining stock market...
23. The level of the money supply is determined by the level of economic activity and...
23. The level of the money supply is determined by the level of economic activity and adjusted at the margin via the implementation of monetary policy by the Federal Reserve. Thus, the U.S. is said to have: (a) an “elastic currency;” (b) a gold standard; (c) a rule-based monetary policy; (d) an independent central bank. 24. The Employment Act of 1946 established the original monetary policy mandate of the Fed. It called for: (a) balancing the federal budget deficit; (b)...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT