Exam 5: The Behavior of Interest Rates

If the price of bonds is set ________ the equilibrium price,the quantity of bonds demanded exceeds the quantity of bonds supplied,a condition called excess ________.

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

Holding everything else constant,if interest rates are expected to increase,the demand for bonds ________ and the demand curve shifts ________.

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

-In the figure above,illustrates the effect of an increased rate of money supply growth at time period 0.From the figure,one can conclude that the

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

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

The interest rate falls when either the demand for bonds ________ or the supply of bonds ________.

In the liquidity preference framework,a one-time increase in the money supply results in a price level effect.The maximum impact of the price level effect on interest rates occurs

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

If there is an excess demand for money,individuals ________ bonds,causing interest rates to ________.

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

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

When gold prices become more volatile,the ________ curve for gold shifts to the ________; ________ the price of gold.

Interest rates increased continuously during the 1970s.The most likely explanation is

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

If brokerage commissions on bond sales decrease,then,other things equal,the demand for bonds will ________ and the demand for real estate will ________.

The demand for silver decreases,other things equal,when

Using the liquidity preference framework,show what happens to interest rates during a business cycle recession.

You would be less willing to purchase U.S.Treasury bonds,other things equal,if