A movement along the bond demand or supply curve occurs when ________ changes.
A) bond price
B) income
C) wealth
D) expected return
Answer: A
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MB Chapter 5
- Using the liquidity preference framework, show what happens to interest rates during a business cycle recession.
- Using the liquidity preference framework, what will happen to interest rates if the Fed increases the money supply?
- If the liquidity effect is smaller than the other effects, and the adjustment to expected inflation is immediate, then the
- If the liquidity effect is smaller than the other effects, and the adjustment to expected inflation is slow, then the
- Of the four effects on interest rates from an increase in the money supply, the initial effect is, generally, the
- Of the four effects on interest rates from an increase in the money supply, the one that works in the opposite direction of the other three is the
- Milton Friedman contends that it is entirely possible that when the money supply rises, interest rates may ________ if the ________ effect is more than offset by changes in income, the price level, and expected inflation.
- If the Fed wants to permanently lower interest rates, then it should raise the rate of money growth if
- When the growth rate of the money supply is increased, interest rates will fall immediately if the liquidity effect is _________ than the other money supply effects and there is ________ adjustment of expected inflation.
- When the growth rate of the money supply increases, interest rates end up being permanently lower if
- ______ in the money supply creates excess demand for ________, causing interest rates to ________, everything else held constant.
- _____ in the money supply creates excess ________ money, causing interest rates to ________, everything else held constant.
- When the price level falls, the ________ curve for nominal money ________, and interest rates ________, everything else held constant.
- When the Fed ________ the money stock, the money supply curve shifts to the ________ and the interest rate ________, everything else held constant.
- When the Fed decreases the money stock, the money supply curve shifts to the ________ and the interest rate ________, everything else held constant.
- Interest rates increased continuously during the 1970s. The most likely explanation is
- In the liquidity preference framework, a one-time increase in the money supply results in a price level effect. The maximum impact of the price level effect on interest rates occurs
- A decline in the expected inflation rate causes the demand for money to ________ and the demand curve to shift to the ________, everything else held constant.
- A rise in the price level causes the demand for money to ________ and the interest rate to ________, everything else held constant.
- When the price level ________, the demand curve for money shifts to the ________ and the interest rate ________, 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.
- A business cycle expansion increases income, causing money demand to ________ and interest rates to ________, everything else held constant.
- When real income ________, the demand curve for money shifts to the ________ and the interest rate ________, everything else held constant.
- A lower level of income causes the demand for money to ________ and the interest rate to ________, everything else held constant.
- In the Keynesian liquidity preference framework, an increase in the interest rate causes the demand curve for money to ________, everything else held constant.
If the answers is incorrect or not given, you can answer the above question in the comment box. If the answers is incorrect or not given, you can answer the above question in the comment box.