Exam 5: The Behavior of Interest Rates

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

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

If gold becomes acceptable as a medium of exchange,the demand for gold will ________ and the demand for bonds will ________,everything else held constant.

In the loanable funds framework,the ________ curve of bonds is equivalent to the ________ curve of loanable funds.

Everything else held constant,a decrease in wealth

Everything else held constant,when real estate prices are expected to decrease

The opportunity cost of holding money is

The economist Irving Fisher,after whom the Fisher effect is named,explained why interest rates ________ as the expected rate of inflation ________,everything else held constant.

Factors that can cause the supply curve for bonds to shift to the right include

Milton Friedman called the response of lower interest rates resulting from an increase in the money supply the ________ effect.

Deflation causes the demand for bonds to ________,the supply of bonds to ________,and bond prices to ________,everything else held constant.

If prices in the diamond market become less volatile,all else equal,then the demand for diamonds ________ and the demand for gold ________.

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

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 T0.From the figure,one can conclude that the

Of the four effects on interest rates from an increase in the money supply,the initial effect is,generally,the

-In the figure above,a factor that could cause the supply of bonds to shift to the right is

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

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

When the economy slips into a recession,normally the demand for bonds ________,the supply of bonds ________,and the interest rate ________,everything else held constant.