Exam 4: Why Do Interest Rates Change?

When stock prices become less volatile,the demand curve for bonds shifts to the ________ and the interest rate ________.

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

As expected inflation falls for the coming year,we expected the price of gold to ________ due to a leftward shift the in ________ curve.

When the inflation rate is expected to increase,the real cost of borrowing declines at any given interest rate; as a result,the ________ bonds increases and the ________ curve shifts to the right.

An increase in the inflation rate will cause the demand curve for bonds to shift to the right.

An increase in expected inflation causes the supply of bonds to ________ and the supply curve to shift to the ________.

Factors that can cause the supply curve for bonds to shift to the right include

Identify and explain the four factors that influence asset demand.Which of these factors affect total asset demand and which influence investors to demand one asset over another?

When income and wealth are rising,the demand for bonds rises and the demand curve shifts to the right.

A higher level of income causes the demand for money to ________ and the interest rate to ________.

Identify and describe three factors that cause the supply curve for bonds to shift.

Use the bond demand and supply framework to explain the Fisher effect and why it occurs.

Factors that determine the demand for an asset include changes in the

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 ________.

Milton Friedman contends that it is entirely possible that when the money supply rises,interest rates may ________ if the ________ effect is more than offset by changes in income,the price level,and expected inflation.

When an economy grows out of a recession,normally the demand for bonds increases and the supply of bonds increases.

Explain how the price of gold should be positively related to expected inflation.

When comparing the loanable funds and liquidity preference frameworks of interest rate determination,which of the following is true?

Holding everything else constant,an increase in wealth lowers the quantity demanded of an asset.

When the federal governments budget deficit increases,the ________ curve for bonds shifts to the ________.