Econ 208 Exam 2 Chapters 5&6 || QUESTIONS WITH
SOLVED ANSWERS!!
Pieces of property that serve as a store of value called correct answers assets
of the four factors that influence asset demand, which factor will cause the demand for all
assets to increase when it increases, everything else held constant? correct answers wealth
Everything else held constant, a decrease in wealth correct answers reduces the demand for
silver
an increase in an asset's expected return relative to that of an alternative asset, holding
everything else constant, --------- the quantity demanded of the asset correct answers increase
Everything else held constant, if the expected return on U.S. Treasury bonds falls from 10 to
5 percent and the expected return on GE stock rises from 7 to 8 percent, then the expected
return of holding GE stock-------- relative to U.S. Treasury bonds and the demand for GE
stock-------- correct answers rises; rises
If housing prices are expected to increase, then, other things equal, the demand for houses
will ------ and that of Treasury bills will------ correct answers increase; decrease
If stock prices are expected to drop dramatically, then, other things equal, the demand for
stocks will----- and that of Treasury bills will----- correct answers decrease; increase
Everything else held constant, if the expected return on RST stock declines from 12 to 9
percent and the expected return on XYZ stock decline from 8 to 7 percent, then the expected
return on holding RST stock---- relative to XYZ stock and demand for XYZ stock correct
answers falls; rises
Everything else held constant, if the expected return on Treasury bonds falls from 8 to 7
percent and the expected return on corporate bonds falls from 10 to 8 percent, then the
expected return of corporate bonds ----- relative to U.S. Treasury bonds and the demand for
corporate bonds correct answers falls; falls
An increase in the expected rate of inflation will ------ the expected return on -----assets,
everything else held constant correct answers reduce; real
If the price of gold becomes less volatile, then, other things equal, the demand for stocks
will----- and the demand for antiques will----- correct answers decrease; decrease
if brokerage commissions on bond sales decrease, then other things equal, the demand for
bonds will----and the demand for real estate will---- correct answers increase, decrease
if gold becomes acceptable as a medium of exchange, the demand for gold will--- and the
demand for bonds will----, everything else held constant correct answers increase; decrease
the demand for silver decreases, other things equal, when correct answers the gold market is
expected to boom
, you would be less willing to purchase U.S. Treasury bonds, other things equal, if correct
answers gold becomes more liquid
you would be more willing to buy AT&T bonds (holding everything else constant) if correct
answers the brokerage commissions on bond sales become cheaper
the demand for gold increases, other things equal, when correct answers interest rates are
expected to rise
the demand for houses decreases, all else equal, when correct answers gold prices are
expected to increase
holding all other factors constant, the quantity demanded of an asset is correct answers
positively related to wealth
if the price of diamonds is expected to decrease, all else equal, then the demand for
diamonds----and the demand for platinum---- correct answers decreases; increases
if prices in the diamond market become less volatile, all else equal, then the demand for
diamonds---- and the demand for gold----- correct answers increases;decreases
in the bond market, the bond demanders are the ----- and the bond suppliers are the---- correct
answers lenders;borrowers
the bond demand curve is ---- sloping, indicating a(n) ---- relationship between the price and
quantity demanded of bonds, everything else equal correct answers downward; inverse
the supply curve for bonds has the usual upward slope, indicating that as the price ----, ceteris
paribus, the --- increases correct answers rises; quantity supplied
In the bond market, the market equilibrium shows the market-clearing ----and market-
clearing ----- correct answers price;interest rate
when the price of a bond is ----the equilibrium price, there is an excess demand for bonds and
price will correct answers below;rise
when the interest rate on a bond is above equilibrium interest rate, in the bond market there is
excess---- and the interest rate will ---- correct answers demand; fall
when the interest rate on a bond is --------equilibrium interest rate, in the bond market there is
excess------ and the interest rate will----- correct answers above; demand; fall
A situation in which quantity of bonds supplied exceeds the quantity of bonds demanded is
called a condition of excess supply; because people want to sell -----bonds than others want
to buy, the price of bonds will---- correct answers more; fall
if the price of bonds is set----- the equilibrium price, the quantity of bonds demanded exceeds
the quantity of bonds supplied, a condition called excess----- correct answers below; demand
