Exam 5: The Behavior of Interest Rates

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

Of the four effects on interest rates from an increase in the money supply,the one that works in the opposite direction of the other three is the

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

Using the liquidity preference framework,what will happen to interest rates if the Fed increases the money supply?

In recent years in Europe,Japan,and the United States,interest rates have remained low because of a combination of

Use the following figure to nswer the question : -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

- In the figure above,a factor that could cause the demand for bonds to decrease (shift to the left)is

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

Holding everything else constant in the market for money,as the interest rate rises,the opportunity cost of holding money ________ thus making money less desirable. So the quantity of money demanded falls.

Use the following figure to answer the question : -Interest rates increased continuously during the 1970s. The most likely explanation is

Higher government deficits ________ the supply of bonds and shift the supply curve to the ________,everything else held constant.

An increase in an asset's expected return relative to that of an alternative asset,holding everything else constant,________ the quantity demanded of the asset.

The bond supply and demand framework is easier to use when analyzing the effects of changes in ________,while the liquidity preference framework provides a simpler analysis of the effects from changes in income,the price level,and the supply of ________.

Everything else held constant,if the expected return on U.S. Treasury bonds falls from 8 to 7 percent and the expected return on corporate bonds falls from 10 to 8 percent,then the expected return of corporate bonds ________ relative to U.S. Treasury bonds and the demand for corporate bonds ________.

Holding everything else constant

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

The demand for houses decreases,all else equal,when

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.

The risk of a well-diversified portfolio depends only on the ________ risk of the assets in the portfolio.

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