A lender who is worried that its cost of funds might rise during the term of a loan it has made can hedge against this rise without eliminating the chance to profit from a decline in the cost of funds by
A) buying futures contracts on Treasury bills.
B) selling futures contracts on Treasury bills.
C) buying put options on Treasury bills.
D) buying call options on Treasury bills.
Question 2
Suppose that data for a particular economy over time suggest that its aggregate demand curve is both steep and shifts frequently. We might reasonably infer that ________.
A) the central bank has an activist emphasis on the stability of economic activity
B) wages and prices are remarkably flexible
C) policy lags are quite long
D) all of the above
E) none of the above
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