Exam 5: The Behavior of Interest Rates

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

The opportunity cost of holding money is

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

Everything else held constant,when the government has higher budget deficits

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

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

In Keynes's liquidity preference framework,

-In the figure above,the factor responsible for the decline in the interest rate is

In the Keynesian liquidity preference framework,an increase in the interest rate causes the demand curve for money to ________,everything else held constant.

Keynes assumed that money has ________ rate of return.

Everything else held constant,a decrease in wealth

The risk of a well-diversified portfolio depends only on the ________ risk of the assets in the portfolio.

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.

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

In Keynes's liquidity preference framework,if there is excess demand for money,there is

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

Holding many risky assets and thus reducing the overall risk an investor faces is called

The demand for Picasso paintings rises (holding everything else equal)when

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

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