Exam 5: The Behavior of Interest Rates

If prices in the diamond market become less volatile,all else equal,then the demand for diamonds ________ and the demand for gold ________.

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

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

If the Fed wants to permanently lower interest rates,then it should raise the rate of money growth if

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

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

If the interest rate on a bond is above the equilibrium interest rate,there is an excess ________ for bonds and the bond price will ________.

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

If the interest rate on a bond is below the equilibrium interest rate,there is an excess ________ of bonds and the bond price will ________.

Holding everything else constant

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

An increase in the expected inflation rate causes the supply of bonds to ________ and the supply curve to shift to the ________,everything else held constant.

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

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

-In the figure above,a factor that could cause the demand for bonds to shift to the right is

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

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

-In the figure above,one factor NOT responsible for the decline in the demand for money is

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

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