Exam 5: The Behavior of Interest Rates

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

Everything else held constant,would an increase in volatility of stock prices have any impact on the demand for rare coins? Why or why not?

The riskiness of an asset is measured by

During business cycle expansions when income and wealth are rising,the demand for bonds ________ and the demand curve shifts to the ________,everything else held constant.

In the market for money,when the Fed decreases the money stock,the money supply curve shifts to the ________ and the interest rate ________,everything else held constant.

When an economy grows out of a recession,normally the demand for bonds ________ and the supply of bonds ________,everything else held constant.

Milton Friedman called the response of lower interest rates resulting from an increase in the money supply the ________ effect.

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

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

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

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

The price of gold should be ________ to the expected inflation rate.

Everything else held constant,if the expected return on RST stock declines from 12 to 9 percent and the expected return on XYZ stock declines from 8 to 7 percent,then the expected return of holding RST stock ________ relative to XYZ stock and demand for XYZ stock ________.

In the loanable funds framework,the ________ curve of bonds is equivalent to the ________ curve of loanable funds.

Of the four effects on interest rates from an increase in the money supply,the initial effect is,generally,the

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

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

Both the CAPM and APT suggest that an asset should be priced so that it has a higher expected return

In the Keynesian liquidity preference framework,a rise in the price level causes the demand for money to ________ and the demand curve to shift to the ________,everything else held constant.

The demand curve for bonds has the usual downward slope,indicating that at ________ prices of the bond,everything else equal,the ________ is higher.