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The difference between the Fed Funds rate and the three month treasury narrowed

ID: 2771604 • Letter: T

Question

The difference between the Fed Funds rate and the three month treasury narrowed as investors began fearing that large banking institutions were likely to fail in the second and third quarters of 2008. The spread widened in the fourth quarter of 2008. True false The difference between the Fed Funds rate and the three month treasury narrowed as investors began fearing that large banking institutions were likely to fail in the second and third quarters of 2008. The spread widened in the fourth quarter of 2008. True false

Explanation / Answer

No, it did not get widened. Infact it got more narrower in the fourth quarter of 2008.