QUESTION 28

1. Classify each of the following in terms of their effect on interest rates (increase or decrease):

   I. Covenants on borrowing become more restrictive. II. The Federal Reserve decrease the money supply. III. Total household wealth increases.

1. A bank maintains bank capital to lessen the chance that it will become insolvent.

   	A.	True
   	B.	False

1. Households generally supply _______ funds to the markets as their income and wealth increase, ceteris paribus.

   	A.	more
   	B.	less