Suppose there is a decrease in the short-term interest rate. Give ...

[audie]

Suppose there is a decrease in the short-term interest rate. Give this reduction in the current short-term interest rate, which of the following will most likely occur?
 
  A) The long-term interest rate will increase.
  B) The long-term interest rate will remain the same.
  C) The long-term interest rate will decrease by more than the short-term rate.
  D) The long-term interest rate will decrease by the same amount as the short-term rate.
  E) The long-term interest rate will decrease, but by less than the short-term rate.

Question 2

For this question, assume that individuals do not hold currency (i.e., c = 0). The money multiplier is equal to
 
  A) 1.
  B) 1/(1 - c).
  C) .
  D) 1/(1- ).
  E) none of the above

[Dnite]

Answer to Question 1

E

Answer to Question 2

E

[audie]

Thank you

[Dnite]

Happy to help you