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1. Individual investors (savers) revise their inflation expectations downward, expected inflation to be lower in the future. Which of the following is the most likely
1. Individual investors (savers) revise their inflation expectations downward, expected inflation to be lower in the future. Which of the following is the most likely outcome in the financial markets?
A. The demand for funds will decrease and interest rates will fall | ||||||||||||||
B. The demand for funds will increase and interest rates will rise. | ||||||||||||||
C. The supply of funds will increase and interest rates will fall. | ||||||||||||||
D. The supply of funds will decrease and interest rates will rise.
2. The primary functions of financial markets include:
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