Exam 5: The Behavior of Interest Rates

Everything else held constant, when households save less, wealth and the demand for bonds ________ and the bond demand curve shifts ________.

The supply curve for bonds has the usual upward slope, indicating that as the price ________, ceteris paribus, the ________ increases.

When the Fed ________ the money stock, the money supply curve shifts to the ________ and the interest rate ________, everything else held constant.

Both the CAPM and APT suggest that an asset should be priced so that it has a higher expected return

Pieces of property that serve as a store of value are called

Everything else held constant, when the government has higher budget deficits

Everything else held constant, an increase in expected inflation, lowers the expected return on ________ compared to ________ assets.

The bond supply and demand framework is easier to use when analyzing the effects of changes in ________, while the liquidity preference framework provides a simpler analysis of the effects from changes in income, the price level, and the supply of ________.

If housing prices are expected to increase, then, other things equal, the demand for houses will ________ and that of Treasury bills will ________.

Everything else held constant, if interest rates are expected to fall in the future, the demand for long-term bonds today ________ and the demand curve shifts to the ________.

In the liquidity preference framework, a one-time increase in the money supply results in a price level effect. The maximum impact of the price level effect on interest rates occurs

The price of gold should be ________ to the expected inflation rate.

When an economy grows out of a recession, normally the demand for bonds ________ and the supply of bonds ________, everything else held constant.

-The figure above illustrates the effect of an increased rate of money supply growth at time period T₀. From the figure, one can conclude that the

In the Keynesian liquidity preference framework, an increase in the interest rate causes the demand curve for money to ________, everything else held constant.

If the price of gold becomes less volatile, then, other things equal, the demand for stocks will ________ and the demand for antiques will ________.

During a recession, the supply of bonds ________ and the supply curve shifts to the ________, everything else held constant.

Higher government deficits ________ the supply of bonds and shift the supply curve to the ________, everything else held constant.

When the inflation rate is expected to increase, the ________ for bonds falls, while the ________ curve shifts to the right, everything else held constant.

If fluctuations in interest rates become smaller, then, other things equal, the demand for stocks ________ and the demand for long-term bonds ________.