Exam 5: The Behavior of Interest Rates

Using the liquidity preference framework,what will happen to interest rates if the Fed increases the money supply?

When the price of a bond decreases,all else equal,the bond demand curve

A lower level of income causes the demand for money to ________ and the interest rate to ________,everything else held constant.

The bond supply curve is ________ sloping,indicating a(n)________ relationship between the price and quantity supplied of bonds,everything else equal.

In the loanable funds framework,the ________ is measured on the vertical axis.

Everything else held constant,would an increase in volatility of stock prices have any impact on the demand for rare coins? Why or why not?

A decrease in the brokerage commissions in the housing market from 6% to 5% of the sales price will shift the ________ curve for bonds to the ________,everything else held constant.

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

You would be more willing to buy AT&T bonds (holding everything else constant)if

If real estate prices are expected to drop,all else equal,the demand for bonds ________ and the interest rate_______.

-In the figure above,the price of bonds would fall from P₂ to P₁ if

If there is an excess supply of money

If the liquidity effect is smaller than the other effects,and the adjustment to expected inflation is immediate,then the

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

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

A decline in the expected inflation rate causes the demand for money to ________ and the demand curve to shift to the ________,everything else held constant.

A higher ________ means that an asset's return is more sensitive to changes in the value of the market portfolio.

If people expect real estate prices to increase significantly,the ________ curve for bonds will shift to the ________,everything else held constant.

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 ________.

During business cycle expansions when income and wealth are rising,the demand for bonds ________ and the demand curve shifts to the ________,everything else held constant.