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 ________.

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

Everything else held constant,if the expected return on ABC stock rises from 5 to 10 percent and the expected return on CBS stock is unchanged,then the expected return of holding CBS stock ________ relative to ABC stock and the demand for CBS stock ________.

Factors that decrease the demand for bonds include

In his Liquidity Preference Framework,Keynes assumed that money has a zero rate of return; thus,

In the bond market,the market equilibrium shows the market-clearing ________ and market-clearing ________.

Higher government deficits ________ the supply of bonds and shift the supply curve to the ________,everything else held constant.

If housing prices are expected to increase,then,other things equal,the demand for houses will ________ and that of Treasury bills will ________.

An increase in an asset's expected return relative to that of an alternative asset,holding everything else constant,________ the quantity demanded of the asset.

Everything else held constant,when stock prices become less volatile,the demand curve for bonds shifts to the ________ and the interest 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.

In the bond market,the bond demanders are the ________ and the bond suppliers are the ________.

Use demand and supply analysis to explain why an expectation of Fed rate hikes would cause Treasury prices to fall.

The demand for gold increases,other things equal,when

Holding all other factors constant,the quantity demanded of an asset is

An increase in the interest rate

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

Of the four effects on interest rates from an increase in the money supply,the one that works in the opposite direction of the other three is 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 ________.

When the government has a surplus,as occurred in the late 1990s,the ________ curve of bonds shifts to the ________,everything else held constant.