1-"The New York Federal Reserve has been injecting liquidity into the repo market to reduce the chance of funding stress after a flare-up in September sent the cost of overnight loans as high as 10%, more than four times the Fed's rate at the time. The New York Federal Reserve's actions would be considered:"

a-Expansionary activities

b-Contractionary activities

c-Stay the same activities

d-None of the above activities

2-The FOMC has instructed the FRBNY Trading Desk to sell $500 million in US Treasury securities. 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-Interest rates and riskiness are inversely related.

TRUE

FALSE