One Futures Contract Is Traded Where Both the Long and Short

question 4

Multiple Choice

One futures contract is traded where both the long and short parties are closing out existing positions.What is the resultant change in the open interest?

• A) No change
• B) Decrease by one
• C) Decrease by two
• D) Increase by one

---

Definitions:

Discount Rate

The rate at which the central bank lends money to commercial banks and other financial institutions through its discount window.

Open Market Operations

Open Market Operations involve the buying and selling of government securities by a central bank to control the money supply and interest rates in the economy.

Tight Monetary Policy

A central bank strategy aiming to slow economic growth by increasing interest rates and reducing the quantity of money in circulation.

Net Exports

The value of a country's total exports minus the value of its total imports, representing the trade balance.