International Finance And Treasury - Study Mode

[#161] Shift of demand curve to down and to left then there must be
Correct Answer

(B) decreases in funds traded

Explanation

Solution: Shift of demand curve to down and to left then there must be decreases in funds traded. A shift in the demand curve is when a determinant of demand other than price changes. It occurs when demand for goods and services changes even though the price didn't.

[#162] Formula of effective annual return is written as
Correct Answer

(A) (1+r) c - 1

Explanation

Solution: Formula of effective annual return is written as (1+r) c - 1. Effective annual return (EAR) is the annual rate that captures the magnifying effect of multiple compounding periods per year of an investment.

[#163] If equilibrium interest rate increases and curve of funding supplied shifts to left then impact on spending is
Correct Answer

(A) increase in near term

Explanation

Solution: If equilibrium interest rate increases and curve of funding supplied shifts to left then impact on spending is increase in near term. The equilibrium interest rate is the rate at which the quantity of money demanded is equal to the quantity of money supplied. The Federal Reserve can alter the equilibrium interest rate by adjusting the supply of money. The demand for money and supply of money can be graphed to determine the equilibrium interest rate.

[#164] Monetary expansion increases and there is decrease in equilibrium interest rate then supply curve of funds must shift
Correct Answer

(D) down and to right

Explanation

Solution: Monetary expansion increases and there is decrease in equilibrium interest rate then supply curve of funds must shift down and to right. Expansionary monetary policy is when a central bank uses its tools to stimulate the economy. That increases the money supply, lowers interest rates, and increases aggregate demand. It boosts growth as measured by gross domestic product.

[#165] If demand of loanable demands decrease then borrowing cost of funds is
Correct Answer

(B) lower

Explanation

Solution: If demand of loanable demands decrease then borrowing cost of funds is lower. Cost of borrowing refers to the total amount a debtor pays to secure a loan and use funds, including financing costs, account maintenance, loan origination, and other loan-related expenses.