Exam (elaborations)
ECO4223 EXAM 2 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
- Course
- Institution
ECO4223 EXAM 2 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
[Show more]
Content preview
ECO4223 EXAM 2 QUESTIONS ANDANSWERS WITH SOLUTIONS 2024
During a recession, the supply of bonds______, and the supply curve shifts to the___________,
everything else held constant.
a. increases; right
b. decreases; left
c. increases; left
d. decreases; right - ANSWER decreases; left
In the bond market, the market equilibrium shows the market-clearing ________ and market-clearing
________.'
a. price; interest rate
b. price; deposit
c. interest rate; premium
d. interest rate; deposit - 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 ________________.
a. right; rises
b. left;falls
c. left; rises
d. right; falls - 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.
a. decreases, increases, rises
b. decreases, decreases, falls
c. increases, increases, rises
d. increases, decreases, falls - 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.
a. falls; left
b. rises, right
c. falls, right
d. rises, left - ANSWER rises, right
When the expected inflation rate increases, the real cost of borrowing ______ and bond supply,
everything else held constant.
a. increases, decreases
b. decreases, increases
c. increases, increases
d. decreases, decreases - 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
a. 12 percent
b. 2 percent
c. 8 percent
d. 10 percent - ANSWER 12 percent
The supply curve for bonds has the usual upward slope indicating that as price ________, ceterus
paribus, the _________ increases.
a. falls, quantity supplied
b. rises, supply
c. rises; quantity supplied
d. falls, supply - 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.
a. demand, demand
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Performance. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.79. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75759 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now