Exam 5: The Behavior of Interest Rates

Pieces of property that serve as a store of value are called

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

It is 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.

If brokerage commissions on stocks fall,everything else held constant,the demand for bonds ________,the price of bonds ________,and the interest rate ________.

Everything else held constant,an increase in the liquidity of bonds results in a ________ in demand for bonds and the demand curve shifts to the ________.

A higher ________ means that an asset's return is more sensitive to changes in the value of the market portfolio.

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

An increase in the expected rate of inflation will ________ the expected return on bonds relative to the that on ________ assets,everything else held constant.

When the growth rate of the money supply increases,interest rates end up being permanently lower if

-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

Using the liquidity preference framework,show what happens to interest rates during a business cycle recession.

-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 price of a bond is above the equilibrium price,there is an excess ________ bonds and price will ________.

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

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

An increase in the expected inflation rate will ________ the ________ for gold,________ its price,everything else held constant.

Holding many risky assets and thus reducing the overall risk an investor faces is called

When the interest rate is above the equilibrium interest rate,there is an excess ________ money and the interest rate will ________.

If there is an excess supply of money