Exam 4: Determining Interest Rates

As a person's wealth increases,which of the following portfolio holdings is likely to increase the least?

The equilibrium real interest rate in Belgium will be

Which combination of assets represents the most diversification?

Economists believe that as a saver's wealth increases,the saver will generally

The Federal Reserve issues a report indicating that future inflation will be higher than had previously seemed likely.As a result

Given that most investors tend to be risk averse,

Suppose that you own $10,000 worth of stock in General Motors.Adding stock in which of the following companies would be least likely to reduce the risk in your portfolio?

If a government's income tax receipts exceed its expenditures,the government is running a

In Spring 2010,many investors feared that Greece may default on its bonds.Make use of a graph of the bond market to show how this affected interest rates on Greek bonds.

The idea that nominal interest rates rise or fall one-for-one with expected inflation is known as

In recent decades,the United States

In a large open economy,

In an article,"Preparing for the Next Black Swan" (Wall Street Journal,Aug 21,2010),the point is made that diversification may be insufficient in protecting one's portfolio during a "Black Swan" event.Why may this be true?

If there is an excess demand for bonds at a given price of bonds,then

Which of the following can best be characterized as a "Black Swan" event?

Risk that is common to all assets of a certain type is referred to as

A small open economy

A decrease in expected inflation

If households increase their saving at the same time that the government increases its deficit,

As wealth increases,which of the following is likely to account for a smaller fraction of a saver's portfolio?