Exam 5: The Behavior of Interest Rates

If there is an excess demand for money, individuals ________ bonds, causing interest rates to ________.

If the interest rate on a bond is above the equilibrium interest rate, there is an excess ________ for bonds and the bond price will ________.

An increase in the expected inflation rate will ________ the ________ for gold, ________ its price, everything else held constant.

When the interest rate on a bond is ________ the equilibrium interest rate, in the bond market there is excess ________ and the interest rate will ________.

If stock prices are expected to drop dramatically, then, other things equal, the demand for stocks will ________ and that of Treasury bills will ________.

Everything else held constant, an increase in the liquidity of bonds results in a ________ in demand for bonds and the demand curve shifts to the ________.

When the price level falls, the ________ curve for nominal money ________, and interest rates ________, everything else held constant.

The demand curve for bonds has the usual downward slope, indicating that at ________ prices of the bond, everything else equal, the ________ is higher.

A business cycle expansion increases income, causing money demand to ________ and interest rates to ________, everything else held constant.

If brokerage commissions on stocks fall, everything else held constant, the demand for bonds ________, the price of bonds ________, and the interest rate ________.

-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

When the growth rate of the money supply is increased, interest rates will fall immediately if the liquidity effect is ________ than the other money supply effects and there is ________ adjustment of expected inflation.

-The figure above illustrates the effect of an increased rate of money supply growth at time period 0. From the figure, one can conclude that the

In the market for money, an interest rate below equilibrium results in an excess ________ money and the interest rate will ________.

Keynes assumed that money has ________ rate of return.

The demand for gold increases, other things equal, when

-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

Discovery of new gold in Alaska will ________ the ________ of gold, ________ its price, everything else held constant.

An increase in the expected rate of inflation will ________ the expected return on bonds relative to the that on ________ assets, everything else held constant.

When the interest rate is above the equilibrium interest rate, there is an excess ________ money and the interest rate will ________.