1-The Federal Reserve Bank increases the required reserve ratio. How will this impact the equilibrium interest rate?

a-Equilibrium interest rate will increase

b-Equilibrium interest rate will decrease

c-Equilibrium interest rate will stay the same

d-Equilibrium interest rate will shift

2-"As the risk of a financial security decreases, it becomes more attractive to suppliers of funds. How will this impact the equilibrium interest rate?"

a-Equilibrium interest rate will increase

b-Equilibrium interest rate will decrease

c-Equilibrium interest rate will stay the same

d-Equilibrium interest rate will shift

3-"Suppose that the current one-year (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e. 2, 3, and 4 respectively) are as follows: 1R1 = 6.00%, 2R1 = 7.00%, 3R1 = 7.50%, and 4R1 = 7.85%. Using Pure Expectations Theory, calculate the current (long-term) rates for the three-year maturity Treasury security."

a-6.00%

b-6.50%

c-6.83%

d-7.09%