Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 the money supply. The initial effect would be to cause shortterm rates to decline; however, a money supply might lead to an increase in expected future inflation, which would cause longterm rates to rise even as shortterm 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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started