QUIZ M4

decrease decrease

A lower level of income causes the demand for money to ________ and the interest rate to ________, everything else held constant.

decrease left

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

rises right

During business cycle expansions when income and wealth are rising, the demand for bonds ________ and the demand curve shifts to the ________, everything else held constant.

fall left

Everything else held constant, an increase in the riskiness of bonds relative to alternative assets causes the demand for bonds to ________ and the demand curve to shift to the ________.

the interest rate

The opportunity cost of holding money is ________.

demand supply

When the inflation rate is expected to increase, the ________ for bonds falls, while the ________ curve shifts to the right, everything else held constant.

demand fall

When the interest rate is above the equilibrium interest rate, there is an excess ________ money and the interest rate will ________.

below rise

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

decrease demand for rise

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