Exam 5: The Behavior of Interest Rates

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

The riskiness of an asset that is unique to the particular asset is

If the Fed wants to permanently lower interest rates,then it should raise the rate of money growth if

The demand for gold increases,other things equal,when

-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

If stock prices are expected to climb next year,everything else held constant,the ________ curve for bonds shifts ________ and the interest rate ________.

A business cycle expansion increases income,causing money demand to ________ and interest rates to ________,everything else held constant.

If brokerage commissions on bond sales decrease,then,other things equal,the demand for bonds will ________ and the demand for real estate will ________.

What is the impact on interest rates when the Federal Reserve decreases the money supply by selling bonds to the public?

Keynes assumed that money has ________ rate of return.

If real estate prices are expected to drop,all else equal,the demand for bonds ________ and the interest rate_______.

When the interest rate on a bond is above the equilibrium interest rate,in the bond market there is excess ________ and the interest rate will ________.

Deflation causes the demand for bonds to ________,the supply of bonds to ________,and bond prices to ________,everything else held constant.

When the government has a surplus,as occurred in the late 1990s,the ________ curve of bonds shifts to the ________,everything else held constant.

Interest rates increased continuously during the 1970s.The most likely explanation is

When real income ________,the demand curve for money shifts to the ________ and the interest rate ________,everything else held constant.

In contrast to the CAPM,the APT assumes that there can be several sources of ________ that cannot be eliminated through diversification.

In his Liquidity Preference Framework,Keynes assumed that money has a zero rate of return; thus,

You would be more willing to buy AT&T bonds (holding everything else constant)if

In the market for money,an interest rate below equilibrium results in an excess ________ money and the interest rate will ________.