Which of the following interest rates will be most affected by a shift to a more restrictive monetary policy?
A)rate on a 30-year home mortgage
B)rate on a 20-year Treasury bond
C)rate on a 10-year bank loan
D)rate on a three-month certificate of deposit

Question

Quizplus · Accepted Answer

The rate on a three-month certificate of deposit will be most affected by a shift to a more restrictive monetary policy as it is a short-term investment that is directly impacted by changes in the federal funds rate. When the Federal Reserve tightens monetary policy, the federal funds rate rises, causing the rate on a three-month CD to also rise.

Which of the Following Interest Rates Will Be Most Affected