Why do government debt managers often use interest-rate swaps?
What will be an ideal response?
Government debt managers find that often times they can minimize borrowing costs by issuing longer term bonds. There is a strong market for these bonds. The problem, however, is that government revenues tend to rise during economic good times and fall during bad times. Short-term interest rates tend to follow the economy as well, rising during good times and falling during recessions. Government debt managers can often obtain both the benefits of offering long-term bonds and matching interest expenses with revenues by using interest-rate swaps.
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A research firm finding concluded that the price elasticity of demand for movie tickets is elastic in the afternoon but inelastic in the evenings. Given this information, to increase overall revenue the theatre owners should
a. Reduce the ticket prices for the afternoon shows and reduce the ticket prices for the evening shows b. Increase the ticket prices for the afternoon shows and reduce the ticket prices for the evening shows c. Reduce the ticket prices for the afternoon shows and increase the ticket prices for the evening shows d. Increase the ticket prices for the afternoon shows and increase the ticket prices for the evening shows
A firm could lower prices and still increase revenue if
A) demand is elastic. B) elasticity of demand is equal to unity. C) demand is inelastic. D) elasticity of demand is equal to zero.
Scarcity implies that people must
A. make choices. B. be selfish. C. earn as much as income as they are able to. D. be irrational.
(Consider This) During and immediately following the severe recession of 2007-2009, commercial bank reserves held on deposit in Federal Reserve Banks:
A. rose to a high of 50 percent of total checkable deposits held by banks. B. fell significantly as commercial banks withdrew reserves to pay off heavy debt obligations. C. increased significantly because of Fed purchases of securities from commercial banks and the paying of interest on bank reserves. D. increased significantly because the Fed increased the required reserve ratio.