Back to Assignment Attempts Average / 1 10. Macroeconomic factors that influence interest rate levels Apart from risk components, several macroeconomic factors such as Federal Reserve (the Fed) policy, federal budget deficit or surplus, international factors, and levels of business activity--influence interest rates. Based on your understanding of the impact of macroeconomic factors, identify which of the following statements is true or false, Statements True False If the Fed increases the money supply, short-term interest rates tend to decline. o When the economy is weakening, the Fed is likely to increase short-term interest rates. O O During the credit crisis of 2008, investors around the world were fearful about the collapse of real estate markets, shaky stock markets, and illiquidity of several securities in the United States and several other nations. The demand for U.S. Treasury bonds increased, which led to a rise in their price and a decline in their yields. O O The Federal Reserve Board has a significant influence over the level of economic activity, inflation, and interest rates in the United States. O O