Exam 5: The Behavior of Interest Rates

The supply curve for bonds has the usual upward slope,indicating that as the price ________,ceteris paribus,the ________ increases.

If gold becomes acceptable as a medium of exchange,the demand for gold will ________ and the demand for bonds will ________,everything else held constant.

When the economy slips into a recession,normally the demand for bonds ________,the supply of bonds ________,and the interest rate ________,everything else held constant.

A situation in which the quantity of bonds supplied exceeds the quantity of bonds demanded is called a condition of excess supply;because people want to sell ________ bonds than others want to buy,the price of bonds will ________.

Of the four factors that influence asset demand,which factor will cause the demand for all assets to increase when it increases,everything else held constant?

If the price of bonds is set ________ the equilibrium price,the quantity of bonds demanded exceeds the quantity of bonds supplied,a condition called excess ________.

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

Holding the expected return on bonds constant,an increase in the expected return on common stocks would ________ the demand for bonds,shifting the demand curve to the ________.

The reduction of brokerage commissions for trading common stocks that occurred in 1975 caused the demand for bonds to ________ and the demand curve to shift to the ________.

- In the figure above,the price of bonds would fall from P1 to P2 when

An increase in the expected inflation rate causes the supply of bonds to ________ and the supply curve to shift to the ________,everything else held constant.

When the growth rate of the money supply increases,interest rates end up being permanently lower if

Use demand and supply analysis to explain why an expectation of Fed rate hikes would cause Treasury prices to fall.

When the expected inflation rate increases,the demand for bonds ________,the supply of bonds ________,and the interest rate ________,everything else held constant.

Risk averse investors always prefer to have higher ________ and lower ________ of the return.

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

Everything else held constant,when the inflation rate is expected to rise,interest rates will ________;this result has been termed the ________.

If the price of diamonds is expected to decrease,all else equal,then the demand for diamonds ________ and the demand for platinum ________.

Use the following figure to answer 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

If housing prices are expected to increase,then,other things equal,the demand for houses will ________ and that of Treasury bills will ________.