Exam 5: The Behavior of Interest Rates

A movement along the bond demand or supply curve occurs when ________ changes.

When the price of a bond is ________ the equilibrium price,there is an excess demand for bonds and price will ________.

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

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

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

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

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

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

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

-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

-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

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

The reduction of brokerage commissions for trading common stocks that occurred in 1975 caused the demand for bonds to ________ and the demand curve to shift to the ________.

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

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

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

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

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,an increase in expected inflation,lowers the expected return on ________ compared to ________ assets.

-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