Which of the following statements about the overnight loans rate is false?
A)The overnight loans rate and the treasury bill rate move closely together.
B)The overnight loans rate and the long-term bond rate trend in the same direction.
C)The overnight loans rate is most often less than the long-term bond rate.
D)The long-term bond rate fluctuates less than the short-term rates.
E)The higher the overnight loans rate, the greater the quantity of money.

Question

Quizplus · Accepted Answer

The statement that the higher the overnight loans rate, the greater the quantity of money is false. Higher overnight rates usually indicate a scarcity of available cash, which tends to decrease the quantity of money.

Which of the Following Statements About the Overnight Loans Rate