EC 303 - The Behavior of Interest Rates

EC 303 - JSU - The Behavior of Interest Rates

greater

The lower the price of the bond, the ________ the quantity of bonds demanded.

demand

A change in quantity demanded is a movement along the _______ curve.

True

True or False:
A change in demand is a change in the quantity demanded at every price.

stock

Demand is a ______ concept that shows the total quantity of bonds desired at each price at a given point in time.

increase

An _________ in the riskiness of bonds causes demand to decrease.

decrease

An increase in the riskiness of bonds causes demand to _________.

demand

Increased liquidity of bonds leads to an increase in ________.

liquidity

Increased ________ of bonds leads to an increase in demand.

increase

In an economic expansion with growing wealth, the demand for bonds will ________.

Expected profitability of Investment opportunities
Expected Inflation
Government Budget

Factors that affect the supply chain are:

right

Expected profitability of investment opportunities: in an expansion, the supply curve shifts to the _______

right

Expected inflation: an increase in expected inflation shifts the supply curve for bonds to the ______

right

Government budget: increased budget deficits shift the supply curve to the _______.

Market equilibrium

Occurs at the price (and interest rate) that equates the quantity of bonds demanded and supplied.

John Maynard Keynes

____________ developed an alternative model of interest rates based on the supply and demand for money

money

John Maynard Keynes developed an alternative model of interest rates based on the supply and demand for ______.

bond market framework.

Keynes alternative’s liquidity preference framework will lead to the same ultimate conclusions as the _____________

Keynes

______ assumed that wealth is primarily stored in the form of bonds and money

bonds and money.

Keynes assumed that wealth is primarily stored in the form of ____________

Income effect
Price-level effect

Factors that shift the demand for money are:

price level effect

A rise in the price level causes the demand for money at each interest rate to increase and the demand curve to shift to the right is known as the:

Income Effect

A higher level of income causes the demand for money at each interest rate to increase and the demand curve to shift to the right is known as:

Milton Friedman

___________ pointed out that when the money supply changes, other things might not “remain constant.”

“remain constant”

Milton Friedman pointed out that when the money supply changes, other things might not __________.