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Eco4223 Exam 2 Questions And Answers With Verified Solutions (GRADED A+)
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Eco4223 Exam 2 Questions And Answers With Verified Solutions (GRADED A+)
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Eco4223 Exam 2 Questions And Answers With Verified Solutions (GRADED A+) During a recession, the supply of bon ds______, and the supply curve shifts to the___________, everything else held constant. - ANSWER✔✔ decreases; left In the bond market, the market equilibrium shows the market -clearing ________ and market -clearing ________.' - ANSWER✔✔ price; interest rate Everything else held constant, when stock prices become less volatile, the demand curve for bonds shifts to the _________, and the interest rate ________________. - ANSWER✔✔ left; rises When the expected inflation rate increases, the demand for bonds __ ______, the supply of bonds ________, and the interest rate ________, everything else held constant. - ANSWER✔✔ decreases, increases, rises 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. - ANSWER✔✔ rises, right When the expected inflation rate increases, the real cost of borrowing ______ and bond supply, everything else held constant. - ANSWER✔✔ decreases, increases If the nominal rate of interest is 2 percent and the expected inflation rate is -10 percent, the real rate of interest is - ANSWER✔✔ 12 percent The supply curve for bonds has the usual upward slope indicating that as price ________, ceterus paribus, the ________ _ increases. - ANSWER✔✔ rises, quantity supplied. When the inflation rate is expected to increase, the ________ for bonds falls, while the ___________ curve shifts to the right, everything else held constant. - ANSWER✔✔ demand, supply The monetary base minus reserves equals - ANSWER✔✔ currency in circulation Monetary Aggregates are - ANSWER✔✔ measures of the money supply report by the Federal reserve In the bond market, the bond demanders are the _______________, and the bond supplier s are the ___________. - ANSWER✔✔ lenders, borrowers When the Fed buys $100 worth of bonds from a member bank. - ANSWER✔✔ reserves increase by $100 When the Fed conducts a contractionary open -market operation of $100, it: - ANSWER✔✔ All of the answers ar e correct Congress established the federal reserve system primarily to _________. - ANSWER✔✔ serve as a lender of last resortThe benefits of buying summaries with Stuvia:
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