Exam 4: Why Do Interest Rates Change?

When bond prices become more volatile,the demand for bonds ________ and the interest rate ________.

When the expected inflation rate decreases,the demand for bonds ________,the supply of bonds ________,and the interest rate ________.

Figure 4.3 -In Figure 4.3,the decrease in the interest rate from i? to i? can be explained by

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

Figure 4.5 -Figure 4.5 illustrates the effect of an increased rate of money supply growth.From the figure,one can conclude that the

When the demand for bonds ________ or the supply of bonds ________,bond prices fall.

When the quantity of bonds demanded equals the quantity of bonds supplied,there is

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

What is the expected return on a bond if the return is 9% two-thirds of the time and 3% one-third of the time? What is the standard deviation of the returns on this bond? Would you prefer this bond or one with an identical expected return and a standard deviation of 4.5? Why?

Describe the factors that shift the demand and supply of money in the loanable funds framework.

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

Holding everything else constant,an increase in the money supply causes

Explain how the loanable funds framework and the supply and demand for bonds are related.

Determining asset prices using stocks of assets rather than flow is called

The Fisher Effect predicts that an increase in expected inflation will lower the interest rate on bonds.