Solved

The Following Graphs Show What Occurs During a Flight to Quality

Question 21

Multiple Choice

The following graphs show what occurs during a flight to quality for the loanable funds market for T-bills (left) and the market for investment grade bonds (right) . 
The following graphs show what occurs during a flight to quality for the loanable funds market for T-bills (left) and the market for investment grade bonds (right) .    Based on the information presented in the graphs, which of the following statements is true? A) As a result of the flight to quality, the interest rate in the Baa market increases, while the interest rate in the T-bill market falls. B) As a result of the flight to quality, there is an increase in the supply of loanable funds in the Baa market. C) As a result of the flight to quality, there is an increase in the supply of loanable funds in the both the T-bill market and the Baa market. D) As a result of the flight to quality, there is an increase in the demand of loanable funds in the Baa market.
Based on the information presented in the graphs, which of the following statements is true?


A) As a result of the flight to quality, the interest rate in the Baa market increases, while the interest rate in the T-bill market falls.
B) As a result of the flight to quality, there is an increase in the supply of loanable funds in the Baa market.
C) As a result of the flight to quality, there is an increase in the supply of loanable funds in the both the T-bill market and the Baa market.
D) As a result of the flight to quality, there is an increase in the demand of loanable funds in the Baa market.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents