If You Buy a Futures Contract for U

question 68

Multiple Choice

If you buy a futures contract for U.S. Treasury bills and on the delivery date the interest rate on T-bills is lower than you expected, you will have

• A)lost money on your long position.
• B)gained money on your long position.
• C)lost money on your short position.
• D)gained money on your short position.

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Definitions:

Net Taxes

The difference between the taxes paid to the government and the transfers or subsidies received from it.

Government Purchases

Government purchases involve the spending by government entities on goods and services, including investments in public infrastructure, which can influence economic activity.

Transfer Payments

Payments made by the government to individuals or entities without any service or goods being received in return, such as social security benefits.

Property Tax

Taxes levied by governments on property owners based on the value of their property, including land and buildings.