If the Federal Reserve tightens the money supply, other things held constant, short-term interest rates will be pushed upward, and this increase probably will be greater than the increase in rates in the long-term market.

True

False

Firms with the most profitable investment opportunities are willing and able to pay the most for capital, so they tend to attract it away from less efficient firms or from those whose products are not in demand.

False

True

If the tax laws stated that interest paid by a corporation was not allowed as a tax-deductible expense, it would probably encourage companies to use more debt financing than they presently do, other things held constant.

	False
	True

If a financial investment held by an individual was issued as the debt of a corporation, the income the individual receives from the corporation is expensed by the corporation as a dividend paid.

	True
	False

The yield curve is downward sloping, or inverted, if the long-term rates are higher than the short-term rates.

	True
	False