If Velocity and the Money Supply Are __________________,Then When One

question 37

Multiple Choice

If velocity and the money supply are __________________,then when one component of spending rises another component of spending ________________.

• A) constant; must fall
• B) constant; must rise
• C) rising; may not necessarily fall
• D) rising; must rise

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Definitions:

Treasury Bond

Long-term, fixed interest government debt securities with a maturity of more than ten years.

STRIPPED Cash Flows

Cash flows from financial instruments that have been separated from their financial structure, often used in securitization.

Arbitrage

The practice of taking advantage of a price difference between two or more markets, striking a combination of matching deals that capitalize upon the imbalance.

Forward Rates

Interest rates or currency exchange rates fixed now for transactions that will occur at a future date.