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Macroeconomic factors have an important effect on both the general level of interest rates and the shape of the yield curve. These primary factors are:

Macroeconomic factors have an important effect on both the general level of interest rates and the shape of the yield curve. These primary factors are: Federal Reserve policy, the federal budget deficit or surplus, international factors like the foreign trade balance and interest rates abroad, and the level of business activity.
The Federal Reserve Board controls the money supply. To stimulate the economy, the Fed q, the money supply. The initial effect would be to cause short-term rates to decline; however, a money supply might lead to an increase in expected future inflation, which would cause long-term rates to rise even as short-term rates fell. The reverse is true when the Fed the money supply.
If the government spends more than it takes in as taxes, it runs a , which must be covered by additional borrowing or by printing money. If the government borrows money, this the demand for funds and
-Selectin interest rates. If the government prints money, the result will be inflation, which will
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