Exam 5: The Behavior of Interest Rates

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

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,during a business cycle expansion,the supply of bonds shifts to the ________ as businesses perceive more profitable investment opportunities,while the demand for bonds shifts to the ________ as a result of the increase in wealth generated by the economic expansion.

A movement along the bond demand or supply curve occurs when ________ changes.

Keynes assumed that money has ________ rate of return.

A rise in the price level causes the demand for money to ________ and the interest rate to ________,everything else held constant.

A business cycle expansion increases income,causing money demand to ________ and interest rates to ________,everything else held constant.

During a recession,the supply of bonds ________ and the supply curve shifts to the ________,everything else held constant.

In the Keynesian liquidity preference framework,a rise in the price level causes the demand for money to ________ and the demand curve to shift to the ________,everything else held constant.

If stock prices are expected to climb next year,everything else held constant,the ________ curve for bonds shifts ________ and the interest rate ________.

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

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

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

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

The demand for Picasso paintings rises (holding everything else equal)when

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

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 ________.

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

Everything else held constant,if interest rates are expected to fall in the future,the demand for long-term bonds today ________ and the demand curve shifts to the ________.

Everything else held constant,when real estate prices are expected to decrease