Exam 8: Interest Rates

A decrease in the demand for loanable funds,holding supply constant,will cause interest rates to:

The relationship between interest rates or yields and the time to maturity for debt instruments of comparable quality is called

An economy with a large share of young people will have more total savings than one with more late middle-aged people.

The basic motives for holding money rather than investments are the:

Compensation for those financial debt instruments that cannot be easily converted to cash at prices close to estimated fair market values is termed:

The default risk premium is the compensation that investors demand for holding securities that cannot easily be converted to cash without major price discounts.

When investors expect __________ inflation rates they will require __________ nominal interest rates so that a real rate of return will remain after the inflation.

The most important holders of Treasury bills are corporations and individuals.

Holding demand constant,a decrease in the supply of loanable funds will result in a (n)___________ in interest rates.

Federal obligations usually issued for maturities of two to five years are called:

Which of the following is not considered to be a basic theory used to explain the term structure of interest rates?

Demand-pull inflation may be defined as an excessive demand for goods and services during periods of economic expansion as a result of large increases in the money supply.

Economists who believe that long-run inflationary bias will continue base their belief on the following factors:

The risk-free interest rate is composed of:

___________________ states that interest rates are a function of the supply and demand for loanable funds.

The term structure of interest rates indicates the relation between interest rates and the maturity of comparable quality debt instruments.

The basic motives for holding money rather than investments are the:

The loanable funds theory used to explain the level of interest rates holds that interest rates are a function of the supply of:

Holding demand constant,an increase in the supply of loanable funds will result in a (n)___________ in interest rates.

The maturity premium is the compensation that investors demand for holding securities that cannot easily be converted to cash without major price discounts.