Why are financial markets important to the health of the economy? They channel funds from people who do not have a productive use for them to people who do, thereby resulting in higher economic efficiency. What effect might a rise in stock prices have on consumers ’ decisions to spend? Higher stock prices mean that consumers’ wealth is higher, and they will be more likely to increase their spending. What effect might a fall in stock prices have on business investment? The lower price for a firm’s shares means that it can raise a smaller amount of funds, so investment in facilities and equipment will fall. The interest rate on Baa corporate bonds is higher on average than the other interest rates. What is the typical relationship among interest rates on three-month Treasury bills, longterm Treasury bonds, and Baa corporate bonds? The interest rate on three-month Treasury bills fluctuates more than the other interest rates and is lower on average. Mishkin Full complete download (test bank link included): oney-banking-and-financial-markets-11-e-frederic-s-mishkin/ Chapter 1 ANSWERS TO QUESTIONS 1. Economics of Money, Banking, and Financial Markets, 11e (Mishkin) Solutions manual Test Bank Solutions Manual for The Economics of Money Banking and Financial Markets 11th edition Frederic S.
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