Question 1
Government bonds are government securities with terms of
◦ more than one year.
◦ three months.
◦ six months.
◦ one month.
Question 2
The federal funds rate is the interest rate that
◦ is paid on government bonds.
◦ the Fed charges banks to borrow funds.
◦ is paid on 3-month Treasury bills.
◦ banks are charged when they borrow reserves from other banks.