Questions:
1-why is the interest rate on a credit card usually higher than the interest rate on an automobile loan?
2- why is the interest rate on a security sold by a city government usually less than the interest rate on a security sold by corporation it both have comparable default risk?'
3-During recessions do expected real interest rates increase or decrease?Explain why. What are the major forces acting on expected real interest rates in recessions?
4-Describe two ways the government could eliminate the interaction of inflation with the tax system.
5-What is the efficient markets hypothesis? What are the most important characteristics of markets that are necessary for them to be efficient?
6-How do stock prices behave if stock markets are efficient and if investors do not care about risk?
7- Explain the major options available to a bank that is short of reserves. What determines which option bank is likely to choose?
8-How can the Fed affect the amount of reserves that banks hold? What interest rates can it change to manipulate the quantity of reserves?