If the Fed Decides to Sell T-Bills, It Increases the Supply

question 108

Multiple Choice

If the Fed decides to sell T-bills, it increases the supply of T-bills.How will this affect the price of T-bills and the interest rate?

• A)T-bill prices fall and interest rates fall.
• B)T-bill prices rise and interest rates rise.
• C)T-bill prices rise and interest rates fall.
• D)T-bill prices fall and interest rates rise.

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Definitions:

Product Market

The marketplace where final goods or services are traded between sellers and consumers.

Financialization

The process by which financial markets, financial institutions, and financial elites gain a greater influence over economic policy and economic outcomes.

Labor Relations

The study and practice of managing the relationships between employers and their workforce, including the negotiation of collective bargaining agreements and handling of disputes.

Employee Training

Programs and activities designed to improve the knowledge and skills of employees for better performance.