Exam 5: The Behavior of Interest Rates

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

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

A lower level of income causes the demand for money to ________ and the interest rate to ________,everything else held constant.

Use the following figure to answer the questions : -In the figure above,the factor responsible for the decline in the interest rate is

Everything else held constant,if the expected return on RST stock declines from 12 to 9 percent and the expected return on XYZ stock declines from 8 to 7 percent,then the expected return of holding RST stock ________ relative to XYZ stock and demand for XYZ stock ________.

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 ________.

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

In Keynes's liquidity preference framework,

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

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

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

The risk of a well-diversified portfolio depends only on the ________ risk of the assets in the portfolio.

A decrease in the brokerage commissions in the housing market from 6% to 5% of the sales price will shift the ________ curve for bonds 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 ________.

When the expected inflation rate increases,the real cost of borrowing ________ and bond supply ________,everything else held constant.

Use the following figure to answer the questions : -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

Use the following figure to answer the questions : -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 economy slips into a recession,normally the demand for bonds ________,the supply of bonds ________,and the interest rate ________,everything else held constant.

Use the following figure to answer the questions : -In the figure above,a factor that could cause the demand for bonds to shift to the right is: