Exam 5: The Behavior of Interest Rates

If the liquidity effect is smaller than the other effects,and the adjustment to expected inflation is immediate,then the

-In the figure above,a factor that could cause the supply of bonds to shift to the right is:

If people expect real estate prices to increase significantly,the ________ curve for bonds will shift to the ________,everything else held constant.

-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

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.

Everything else held constant,when households save less,wealth and the demand for bonds ________ and the bond demand curve shifts ________.

If prices in the bond market become more volatile,everything else held constant,the demand curve for bonds shifts ________ and interest rates ________.

-In the figure above,the price of bonds would fall from P₁ to P_{2 when}

Everything else held constant,when prices in the art market become more uncertain,

-In the figure above,a factor that could cause the supply of bonds to increase (shift to the right)is:

Holding everything else constant,if interest rates are expected to increase,the demand for bonds ________ and the demand curve shifts ________.

Factors that decrease the demand for bonds include

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

Everything else held constant,when stock prices become less volatile,the demand curve for bonds shifts to the ________ and the interest rate ________.

In Keynes's liquidity preference framework,

When the price of a bond decreases,all else equal,the bond demand curve

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

A movement along the bond demand or supply curve occurs when ________ changes.

Everything else held constant,an increase in the riskiness of bonds relative to alternative assets causes the demand for bonds to ________ and the demand curve to shift to the ________.