Exam 5: The Behavior of Interest Rates

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

________ in the money supply creates excess ________ money,causing interest rates to ________,everything else held constant.

-In the figure above,the decrease in the interest rate from i₁ to i₂ can be explained by

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

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

Everything else held constant,a decrease in wealth

Everything else held constant,when the inflation rate is expected to rise,interest rates will ________;this result has been termed the ________.

In contrast to the CAPM,the APT assumes that there can be several sources of ________ that cannot be eliminated through diversification.

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

If stock prices are expected to climb next year,everything else held constant,the ________ curve for bonds shifts ________ and the interest rate ________.

When the inflation rate is expected to increase,the ________ for bonds falls,while the ________ curve shifts to the right,everything else held constant.

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

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

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

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

The price of gold should be ________ to the expected inflation rate.

If gold becomes acceptable as a medium of exchange,the demand for gold will ________ and the demand for bonds will ________,everything else held constant.

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 market for money,an interest rate below equilibrium results in an excess ________ money and the interest rate will ________.