Question

: Q5: Why do Government Treasury bills have lower interest rate than large-denomination negotiable bank CDs? Answer:

Q6: When the American dollar worth more in relation to currencies of other countries, would an American be more likely to buy American-made or foreign-made jeans? Answer:

Q7: Is everybody worse off when interest rates rise?

Answer 1

5) T-bills are government securities that mature in less than one year and are very safe securities. They provide a guaranteed rate of return. There is no default risk, Because of the short maturity period, the price is relatively stable, even though they are subject to inflation. T-bills offer the most conservative rate of return. That is why Treasury bills have lower interest rates than large-denomination negotiable bank CDs.

6) They will buy American made jeans because a change in a foreign currency will affect the cost of importing that country,s goods. If the foreign currency is down relative to the currency of the importing country, its currency and products will be cheaper for the importing country. If the foreign currency is up relative to the currency of the importing country, its currency and products will be more expensive for the importers.