True / False:
1. The larger the federal deficit, other things held constant, the higher are interest rates.
2. If the Fed injects a huge amount of money into the markets, inflation is expected to decline, and long-term interest rates are expected to rise.
3. Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates.
4. When the economy is weakening, the Fed is likely to decrease short-term interest rates.

Explanation:

1) when the federal deficit of a nation grows larger the federal government the increase the rate of bonds and other financial securities being issued to the public in a bid to raise funds to offset the Federal deficit and this in turn will lead to higher interest rates been set by the federal reserve as well

2) when there is an excess amount of money in circulation following the injection of a huge amount of money in the market the demand of goods and services will rise higher( increase in purchasing power ) than the supply of goods hence inflation will increase

3) long term interest rates are less sensitive to economic booms and recessions because most economic booms do not last long enough to affect the long term interest rates.

4) decreasing the short-term interest rates during bad economy is a a very effective tool used by the Fed to help ease economic burdens on citizens taking or holding short term loans

a

b

b

a

c

b

d

d

none of these are correct, as they are all sources of american law

a