Exam 4: Why Do Interest Rates Change?

Figure 4.4 -In Figure 4.4,the most likely cause of the increase in the equilibrium interest rate from i? to i? is

When people begin to expect a large run up in stock prices,the demand curve for bonds shifts to the ________ and the interest rate ________.

Figure 4.4 -In Figure 4.4,the most likely cause of the increase in the equilibrium interest rate from i? to i? is a(n)________ in the ________.

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

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

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

Explain the differences between the loanable funds framework and the liquidity preference framework.

The higher the standard deviation of returns on an asset,the ________ the asset's ________.

When the price of a bond is below the equilibrium price,there is excess ________ in the bond market and the price will ________.

An increase in the expected rate of inflation will ________ the expected return on bonds relative to that on ________ assets,and shift the ________ curve to the left.

If investors perceive greater interest rate risk,what will happen to the equilibrium interest rate in the bond market? Explain using the bond demand and supply framework.

When the economy enters into a boom,normally the demand for bonds ________, the supply of bonds ________,and the interest rate ________.

A decline in the expected inflation rate causes the demand for money to ________ and the demand curve to shift to the ________.

A person who is risk averse prefers to hold assets that are more,not less,risky.

When the federal government's budget deficit decreases,the ________ curve for bonds shifts to the ________.

Factors that cause the demand curve for bonds to shift to the left include

A movement along the demand (or supply)curve occurs when the quantity demanded (or supplied)changes at each given price (or interest rate)of the bond in response to a change in some other factor besides the bond's price or interest rate.

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

What is the model whose equations are estimated using statistical procedures used in forecasting interest rates called?

What is the difference between systematic and nonsystematic risk?