The Following Graphs Show What Occurs During a Flight to Quality

question 33

Multiple Choice

The following graphs show what occurs during a flight to quality for the loanable funds market for T-bills (left) and the market for investment grade bonds (right) . 

Based on the information presented in the graphs, which of the following statements is true?

• A)As a result of the flight to quality, the interest rate in the Baa market increases, while the interest rate in the T-bill market falls.
• B)As a result of the flight to quality, there is an increase in the supply of loanable funds in the Baa market.
• C)As a result of the flight to quality, there is an increase in the supply of loanable funds in the both the T-bill market and the Baa market.
• D)As a result of the flight to quality, there is an increase in the demand of loanable funds in the Baa market.

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Definitions:

Units

A measurement of quantity, such as items, hours, or other measures, used in the organization or operation of businesses.

Direct Labor

The wages and benefits paid to employees who are directly involved in the production process of a company's products or services.

Factory Overhead

Any costs related to the production process that are not directly tied to the creation of the product, such as utilities, maintenance, and wages for non-production staff.

Printing Department

The printing department is a specialized division within an organization or a dedicated facility that focuses on producing printed materials, such as documents, books, or promotional materials.