Quiz #4
decreases; increases; rises
When the expected inflation rate increases, the demand for bonds ________, the supply of bonds ________, and the interest rate ________, everything else held constant. A. increases; increases; rises B. increases; decreases; falls C. decreases; decreases; falls D. decreases; increases; rises
increase; decrease; increase
Deflation causes the demand for bonds to ________, the supply of bonds to ________, and bond prices to ________, everything else held constant. A. increase; increase; increase B. increase; decrease; increase C. decrease; increase; increase D. decrease; decrease; increase
rises; right
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 ________. A. falls; right B. rises; right C. rises; left D. falls; left
falls; falls
Everything else held constant, if the expected return on Disney stock rises from 5 to 10 percent and the expected return on CBS stock is unchanged, then the expected return of holding CBS stock ________ relative to Disney stock and the demand for CBS stock ________. A. rises; falls B. falls; falls C. falls; rises D. rises; rises
decrease; left
Everything else held constant, when households save less, wealth and the demand for bonds ________ and the bond demand curve shifts ________. A. decrease; left B. increase; right C. decrease; right D. increase; left
left; rises
Everything else held constant, when stock prices become less volatile, the demand curve for bonds shifts to the ________ and the interest rate ________. A. right; falls B. left; falls C. left; rises D. right; rises
the supply curve for bonds shifts to the right and the interest rate rises.
Everything else held constant, when the government has higher budget deficits A. the supply curve for bonds shifts to the right and the interest rate falls. B. the supply curve for bonds shifts to the right and the interest rate rises. C. the demand curve for bonds shifts to the left and the interest rate falls. D. the demand curve for bonds shifts to the left and the interest rate rises.
an expansion in overall economic activity.
Factors that can cause the supply curve for bonds to shift to the right, everything else held constant, include A. a decrease in expected inflation. B. a decrease in government deficits. C. an expansion in overall economic activity. D. a business cycle recession.
the more liquid is asset A, relative to alternative assets, the greater will be the demand for asset A.
Holding everything else constant, A. if wealth increases, demand for asset A increases and demand for alternative assets decreases. B. the more liquid is asset A, relative to alternative assets, the greater will be the demand for asset A. C. the lower the expected return to asset A relative to alternative assets, the greater will be the demand for asset A. D. if asset A's risk rises relative to that of alternative assets, the demand will increase for asset A.
increase; decrease
If brokerage commissions on bond sales decrease, then, other things equal, the demand for bonds will ________ and the demand for real estate will ________. A. increase; increase B. decrease; decrease C. decrease; increase D. increase; decrease
demand; left; rises
If stock prices are expected to climb next year, everything else held constant, the ________ curve for bonds shifts ________ and the interest rate ________. A. supply; left; rises B. demand; right; rises C. demand; left; falls D. demand; left; rises
increases; increases
If wealth increases, the demand for stocks ________ and that of long−term bonds ________, everything else held constant. A. increases; decreases B. decreases; decreases C. decreases; increases D. increases; increases
lenders; borrowers
In the bond market, the bond demanders are the ________ and the bond suppliers are the ________. A. borrowers; lenders B. lenders; borrowers C. borrowers; advancers D. lenders; advancers
increases; decreases
The interest rate falls when either the demand for bonds ________ or the supply of bonds ________. A. increases; decreases B. increases; increases C. decreases; decreases D. decreases; increases
decreases; increases
When the expected inflation rate increases, the real cost of borrowing ________ and bond supply ________, everything else held constant. A. decreases; increases. B. increases; decreases C. increases; increases D. decreases; decreases
