International Finance And Treasury - Study Mode

[#166] To create situation with no shortage of funds, relationship between funds supplied and funds demanded must have
Correct Answer

(D) inverse relationship

Explanation

Solution: To create situation with no shortage of funds, relationship between funds supplied and funds demanded must have inverse relationship.

[#167] Funds demand which is pushed by users of funds in financial markets are classified as
Correct Answer

(B) demand of loan-able funds

Explanation

Solution: Funds demand which is pushed by users of funds in financial markets are classified as demand of loan-able funds. The demand for loanable funds represents the behavior of borrowers and the quantity of loans demanded. The lower the interest rate, the less expensive it is to borrow.

[#168] If equilibrium interest rate increases with respect to increase in interest rate, then movement along supply of funds curve is
Correct Answer

(C) upside movement

Explanation

Solution: If equilibrium interest rate increases with respect to increase in interest rate, then movement along supply of funds curve is upside movement. 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.

[#169] The demand for heavy loans can cause
Correct Answer

(B) deficiencies for banks

Explanation

Solution: The demand for heavy loans can cause deficiencies for banks.

[#170] Agreement which incurs transaction between two parties and promise held that second party will sell security at specific maturity is classified as
Correct Answer

(D) reverse repurchase agreement

Explanation

Solution: Agreement which incurs transaction between two parties and promise held that second party will sell security at specific maturity is classified as reverse repurchase agreement. A reverse repurchase agreement, or "reverse repo", is the purchase of securities with the agreement to sell them at a higher price at a specific future date.