Exam 5: The Behaviour of Interest Rates

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

When the interest rate is above the equilibrium interest rate,there is an excess ________ money and the interest rate will ________.

Everything else held constant,if the expected return on bonds falls from 10 to 5 percent and the expected return on GE stock rises from 7 to 8 percent,then the expected return of holding GE stock ________ relative to bonds and the demand for GE stock ________.

When real income ________,the demand curve for money shifts to the ________ and the interest rate ________,everything else held constant.

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

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

-A decrease in the brokerage commissions in the housing market from 6 percent to 5 percent of the sales price will shift the ________ curve for bonds to the ________,everything else held constant.

-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 ________.

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

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

Using the liquidity preference framework,what will happen to interest rates if the Bank of Canada increases the money supply?

The riskiness of an asset is measured by ________.

-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 ________.

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

-Everything else held constant,when bonds become less widely traded,and as a consequence the market becomes less liquid,the demand curve for bonds shifts to the ________ and the interest rate ________.

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

A return to the gold standard,that is,using gold for money will ________ the ________ for gold,________ its price,everything else held constant.

Everything else held constant,would an increase in volatility of stock prices have any impact on the demand for rare coins? Why or why not?

If the price of gold becomes less volatile,then,other things equal,the demand for stocks will ________ and the demand for gold will ________.