Exam 5: The Behavior of Interest Rates

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

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

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?

Holding everything else constant

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

The riskiness of an asset is measured by

If the expected return on bonds increases,all else equal,the demand for bonds increases,the price of bonds ________,and the interest rate ________.

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

-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

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

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

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

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

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

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

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

In Keynes's liquidity preference framework,if there is excess demand for money,there is

-In the figure above,illustrates the effect of an increased rate of money supply growth at time period 0.From the figure,one can conclude that the

________ in the money supply creates excess ________ money,causing interest rates to ________,everything else held constant.

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