Exam 5: The Behavior of Interest Rates

Everything else held constant,if the expected return on U.S. Treasury bonds falls from 10 to 5 percent and the expected return on GE stock rises from 7 to 8 percent,then the expected return of holding GE stock ________ relative to U.S. Treasury bonds and the demand for GE stock ________.

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

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

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

The equilibrium price and corresponding equilibrium interest rate in the bond market are found where

The demand for gold increases,other things equal,when

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

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 ________.

The opportunity cost of holding money is

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

The bond demand curve is ________ sloping,indicating a(n)________ relationship between the price and quantity demanded of bonds,everything else equal.

When the inflation rate is expected to increase,the ________ for bonds falls,while the ________ curve shifts to the right,everything else held constant.

If stock prices are expected to drop dramatically,then,other things equal,the demand for stocks will ________ and that of Treasury bills will ________.

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

Factors that can cause the supply curve for bonds to shift to the right,everything else held constant,include

In the market for money,a rise in the price level causes the demand for money to ________ and the interest rate 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.

Everything else held constant,if the expected return on Disney stock rises from 5 to 10 percent and the expected return on CBS stock is unchanged,then the expected return of holding CBS stock ________ relative to Disney stock and the demand for CBS stock ________.

In Keynes's liquidity preference framework,as the expected return on bonds increases (holding everything else unchanged),the expected return on money ________,causing the demand for ________ to fall.

In the market for money,when the price level falls,the ________ curve for nominal money ________,and interest rates ________,everything else held constant.