Exam 5: The Behavior of Interest Rates

In the 1990s Japan had the lowest interest rates in the world due to a combination of

In a business cycle expansion,the ________ of bonds increases and the ________ curve shifts to the ________ as business investments are expected to be more profitable.

-In the figure above,the decrease in the interest rate from i1 to i2 can be explained by

When stock prices become more volatile,the ________ curve for gold shifts right and gold prices ________,everything else held constant.

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

An increase in the interest rate

When the growth rate of the money supply increases,interest rates end up being permanently lower if

In the Keynesian liquidity preference framework,a rise in the price level causes the demand for money to ________ and the demand curve to shift to the ________,everything else held constant.

Everything else held constant,when the inflation rate is expected to rise,interest rates will ________;this result has been termed the ________.

It is possible that when the money supply rises,interest rates may ________ if the ________ effect is more than offset by changes in income,the price level,and expected inflation.

Everything else held constant,when prices in the art market become more uncertain

If wealth increases,the demand for stocks ________ and that of long-term bonds ________,everything else held constant.

Factors that decrease the demand for bonds include

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 ________.

Everything else held constant,an increase in the riskiness of bonds relative to alternative assets causes the demand for bonds to ________ and the demand curve to shift to the ________.

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

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

Holding everything else constant,if interest rates are expected to increase,the demand for bonds ________ and the demand curve shifts ________.

-In 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

Everything else held constant,when bonds become less widely traded,and as a consequence the market becomes less liquid,the demand curve for bonds shifts to the ________ and the interest rate ________.