8. Macroeconomic factors that influence interest rate levels

Apart from risk components, several macroeconomic factorssuch as Federal Reserve (the Fed) policy, federal budget deficit or surplus, international factors, and levels of business activityinfluence interest rates.

Based on your understanding of the impact of macroeconomic factors, identify which of the following statements are true or false:

Statements	True	False
When the Fed increases the money supply, short-term interest rates tend to decline.
When the economy is weakening, the Fed is likely to increase short-term interest rates.
Foreign investments fuel growth in a country. However, this investment is based on factors that affect the business environment and increase riskiness, such as macroeconomic policies, political changes, labor issues, tax rates, and regulations.
When the economy is weakening, the Fed is likely to decrease short-term interest rates.